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School of Economics Academic Year 2014-15 Term 2 Course: ECON103 International Economics A Instructor Name Email Office : Dr. Peter Wilson : [email protected] :5080 Adjunct Room COURSE DESCRIPTION This course is divided into two parts. The first part is concerned with commodity or goods and services trade. Why do countries trade? Why do some countries export cars, and other countries export hospital services? Why do countries protect their economies from foreign competition? Should countries sign trade agreements with other countries? These are among the questions we will discuss in the first half of this course. The second half considers issues generally of a macroeconomic nature and focuses on monetary/financial payments. Two of the most important prices affecting business decisions are the foreign exchange rate and the rate of interest. Both of these are intimately related to the balance of payments, particularly to capital and financial flows, and the foreign exchange market. We will discuss how countries try to simultaneously maintain internal and external balance and what influences their choice of foreign exchange rate regime. We will also examine the evolution of the international monetary system and what form international money should take. Should it be the US dollar or the RMB? LEARNING OBJECTIVES This course aims to equip business students with the basic knowledge and skill to analyze international economic issues. ASSESSMENT METHODS Class Participation Mid-term Test : 10% : 20% Group Project : 30% Final Examination Total : 40% : 100% Please note that the midterm is closed book and the final examination is open book but no laptops or tablets can be used. GROUP PROJECTS Depending on the size of each class, teams of 3-5 students will work on projects which will involve power-point presentations and responding to questions in class. Details of the teams, 1 project themes and deadlines for submission and timetable for presentation in class will be given at the start of the course. EXAMINATIONS There will be a closed book Midterm Quiz during class after the first half of the course and a two-hour open book (no computers, tablets etc.) written examination at the end of the course. ACADEMIC INTEGRITY All acts of academic dishonesty (including, but not limited to, plagiarism, cheating, fabrication, facilitation of acts of academic dishonesty by others, unauthorized possession of exam questions, or tampering with the academic work of other students) are serious offences. All work presented in class must be the student’s own work. Any student caught violating this policy may result in the student receiving zero marks for the component assessment or a fail grade for the course. This policy applies to all works (whether oral or written) submitted for the purposes of assessment. Where in doubt, students are encouraged to consult the instructors of the course. Details on the SMU Code of Academic Integrity may be accessed at http://www.smuscd.org/resources.html. CLASS TIMINGS Classes are 3 hours per week. Each class will involve lecture material, open discussion and depending on the timetable, the presentation of group projects and open critique. Learning is a two-way dialogue instead of a one-way lecture. For that reason a high level of student participation is expected in each class. RECOMMENDED TEXT AND READINGS Main Robert J. Carbaugh, International Economics 14th Ed 2013, Cengage. Recommended Paul R. Krugman, Maurice Obstfeld and Marc Melitz, International Economics, Pearson, 9th edition, 2010. Useful Links 1. www.economist.com 2. www.iesingapore.com/ 3. www.worldbank.org 4. www.wto.org 5. www.imf.org 2 6. www.iie.com 7. www.oecd.org 8. www.nber.org 9. www.brookings.org 10. www.adb.org For primary data, try the following: (1) World Bank’s World Development Indicators online: http://data.worldbank.org/indicator (2) Penn World Tables http://pwt.econ.upenn.edu/ For individual country descriptions, try the CIA World Fact Book https://www.cia.gov/library/publications/the-world-factbook/index.html For Singapore have a look at the bi-annual Monetary Authority of Singapore: Macroeconomic Review mas.gov.sg 3 WEEKLY LESSON PLAN Week Beginning 1 5 January Topic The international economy and globalization; classical trade theory 2 12 January Comparative advantage; the gains from trade Chapters 2,3 3 19 January Other trade theories Chapters 2,3 4 26 January Protection: tariffs; non-tariff barriers Chapters 4,5 5 2 February Trade and industrial policy: the protection debate; international factor mobility Chapters 6,9 6 9 February Economic integration: customs union theory; bilateral preferential trade arrangements Chapter 8 7 16 February MIDTERM QUIZ 8 23 February Recess Week 9 2 March 10 9 March 11 16 March 12 23 March 13 30 March 14 6 April Revision Week 15 13 April Final Examinations Begin The balance of payments: the balance of payments accounts; global imbalances The foreign exchange market: the market for foreign currencies; the determination of exchange rates Balance of payments adjustment: the balance of payments as a policy problem; balance of payments policies Exchange rates and international money: the choice of exchange rate regime; the choice of international money The international monetary system: The Breton Woods system; the present ‘non-system’. * Main Text 4 Readings* Chapters 1,2 Chapter 10 Chapters 11,12 Chapters 13, 14 16 Chapters 15,17 Chapter 17