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ECON420:InternationalEconomics UniversityofIllinoisatUrbana-Champaign CollegeofLiberalArts&Sciences DepartmentofEconomics LuizFelipeLeiteEstanislaudoAmaral Fall2016 114DavidKinleyHall Tuesdays/Thursdays,12:30pm-1:50pm Communication: Office:15DavidKinleyHall E-mail:[email protected] OfficeHours: Tuesdays,5:00pm-6:30pm. Fridays,4:00-5:30pm. (Knockonroom15,DKH,andI'llcomeouttomeetyou) Orbyappointment CatalogDescription: Introduction to the theory of international trade and finance with selected application to current problems of trade policy, balance of payments adjustment, the international monetary system, and globalizationissues.(3Hours)Prerequisite:ECON302orequivalent,orconsentofinstructor;ECON303 isrecommended. CourseDescription: This course is an introduction to international economics targeted toward economics majors at a 400 level.Itsmaintopic,therefore,concernseconomicinteractionsbetweenagents(consumers,firmsand governments)ofdifferentcountries.Itisdividedintotworoughlyequalparts:internationaltradeand internationalfinance. Thefirstpart,internationaltrade,focusesonthemicroeconomicsofinternationaleconomics.Itbegins withasimplemodeloftradeinacontextofpartialequilibriumtoaddresstradepolicyissues.Then,it covers the main historical theories regarding international trade, based on productivity and resource differences, as well as more recent contributions, based on economies of scale and firm differences. Finally, it discusses political considerations regarding international trade. This part tries to answer questionssuchas"Istradebeneficial?","Whatdrivestradepatterns?","Whogainsandwholoseswith internationaltrade?","Whatkeepstradefromexpanding?". The second part, international finance, focuses on the macroeconomics of international economics. It startscoveringbasicdefinitionsofnationalaccountsforopeneconomiesandthebalanceofpayments. Then,itdevelopsastudyofexchangeratesandtheyareaffectedbymonetarysupplydecisions.After that,macroeconomicpolicyforopeneconomiesiscoveredandusedasatooltounderstandexchange rateregimesandotherinternationalfinanceissues.Thisparttriestoanswerquestionssuchas"Howto measurevariablesforopeneconomics?","Whatdeterminesexchangerates?","Howeconomicpolicyis differentininternationalcontexts?","Whataretheconsequencesofdifferentexchangerateregimes?". Page1of6 CourseFormat: Thecoursewillbecomprisedofbiweeklylectures. CourseObjectives: • Introducestudentstothefieldofinternationaleconomics. • Connectthetheoriesofinternationaleconomicstocurrentissues. • Showstudentshoweconomictheorycanbeappliedtotheunderstandingofpracticalissues. LearningResources: Required: • • • • Krugman,Obstfeld,Melitz.2012.InternationalEconomics:TheoryandPolicy.10thEdition, Pearson.(Earliereditionsareacceptable,theonlineplatformwillnotbeused). Eaton,JonathanandSamuelKortum.2012."PuttingRicardotoWork."JournalofEconomic Perspectives,26(2):65-90.(https://www.aeaweb.org/articles?id=10.1257/jep.26.2.65) Lane,PhilipR..2012."TheEuropeanSovereignDebtCrisis."JournalofEconomicPerspectives, 26(3):49-68.(https://www.aeaweb.org/articles?id=10.1257/jep.26.3.49) Melitz,MarcJ.andDanielTrefler.2012."GainsfromTradeWhenFirmsMatter."Journalof EconomicPerspectives,26(2):91-118. (https://www.aeaweb.org/articles?id=10.1257/jep.26.2.91) Additional: • • Eichengreen,Barry.2008.GlobalizingCapital:AHistoryoftheInternationalMonetarySystem. 2ndEdition,PrincetonUniversityPress. Helpman,Elhahan.2011.UnderstandingGlobalTrade.1stEdition,TheBelknapPressofHarvard UniversityPress. StudentAssessment: Scoring • Homework-10%ofTotalPoints • PaperAssignment1-5%ofTotalPoints • PaperAssignment2-5%ofTotalPoints • PaperAssignment3-5%ofTotalPoints • Exam1-15%ofTotalPoints • Exam2-15%ofTotalPoints • Exam3-15%ofTotalPoints • FinalExam-30%ofTotalPoints Yourgradewillbecalculatedasapercentageofthesepoints.Thefinalgradefortheclasswillbescored out of 100 points. To calculate your grade before all exams and assignments are finalized, divide the totalpointsyouhavescoredinthecoursesofarbythetotalamountofpotentialpoints.Multiplythat numberby100androundtothenearestintegerthencomparethatnumbertothePlus/MinusGrade Cutoffsbelow. Page2of6 Plus/MinusGradeCutoffs A+≥97 B+≥87 C+≥77 D+≥67 60>F 97>A≥94 87>B≥84 77>C≥74 67>D≥64 94>A-≥90 84>B-≥80 74>C-≥70 64>D-≥60 AssessmentPolicies HomeworkAssignmentPolicy: HomeworkistobecompletedandsubmittedonlinethoughMoodle.Therewillbe13homeworksets. TheywillbedueonFridaysat11:55pm.Lateassignmentsreceivenocredit.Thehomeworkportionof yourgradewillbetheaverageofallyourassignmentscoreswiththelowestassignmentgradedropped. PaperAssignmentPolicy: Therewillbethreepaperassignments.Ineachoftheseassignmentsstudentsmustread,summarizeand discussonetextrelatedtocontentseeninclass,producinga4to6pagereport.Paperassignmentsare tobeturnedinatthebeginningoftheclassinwhichtheyaredue.Lateassignmentsreceivenocredit. Assignmentscanbeturnedinearlyatyourinstructor’soffice.Detailedinstructionswillbegivenlater. ExamPolicy: Intheeventthatastudentmissesoneofthefirstthreeexams,thepointsfromthemissedexamwillbe placed on the final. The student must provide a reasonable motive for missing one of the three first exams.Therearenomake-upexams.Thefinalwillthencomprise45%ratherthan30%oftotalpoints. Intheeventthatastudentmissesasecondin-termexam,theinstructorreservestherighttogivethe studentazeroonthatexam. The following materials are allowed for use during the exam: accounting calculator or four-function calculator.Therearetobenobooks,papersotherthantheexamitself,cell-phonesorotheritemsthat connecttotheInternet.StudentsfoundtobeusingunapproveditemsareinviolationoftheAcademic IntegritypolicyoftheUniversityandwillbesubjecttodisciplinaryaction. ImportantDates: DeadlinetoAdd:September2. Exam1:September20. PaperAssignment1:September27 Exam2:October11. DeadlinetoDropwithoutagradeofW:October16. PaperAssignment2:October20. Exam3:November8. PaperAssignment3:December6. FinalExam:December12,locationTBA,1:30pm-4:30pm. FinalExamConflictPolicy: FromtheUniversity’sfinalexampolicy: • Anystudenthavingmorethantwoconsecutivefinalexaminationsisentitledtoreschedulingas followsifheorshetakesthefollowingactionnolaterthanthelastdayofclasses: o Thestudentmustinvestigatewhetheraconflictexaminationisbeingheldatanother timeforanyoftheexaminationsinvolved. o Ifaconflictexaminationhasbeenscheduledforanyofthecourses,thestudentmust takeoneormoreoftheseconflictexaminations.Ifconflictexaminationsareofferedfor Page3of6 o o morethanonecourse,thestudentmusttaketheconflictforthecoursethathasthe largestnumberofstudents. Ifnoconflictexaminationshavebeenscheduled,thestudentmustcontactthe instructorofthecoursehavingthelargestnumberofstudents.Thecontactmustbe madenolaterthanthelastdayofclasses,andthatinstructormustprovideamakeup examination. Normallyinasemesterseveralcombined-sections,conflict,andnoncombined examinationsaregivenatthesametime.Asaguidetoresolvingconflicts,anorderof priorityhasbeenestablishedwithineachexaminationperiod,andastudentshould resolveaconflictusingthepublishedexaminationschedulesandthefollowingpriority guidelines. § Nationalandstateprofessionalexaminations(e.g.,CPA,actuarialscience, ArchitectureRegistrationExamination)takepriorityovercampusfinal examinations.Aninstructormustofferaconflictexaminationtoastudent scheduledtotakeanationalorstateprofessionalexaminationandacampus finalexaminationatthesametime. § Anoncombinedcourseexaminationhasprecedenceoveranycombinedsectionsorconflictexamination. § Adepartmentofferingacombined-sectionsfinalexaminationmustprovidea conflictexaminationifrequiredtoaccommodatestudentconflicts. TheUniversity’sfinalexampolicyisavailableat: http://studentcode.illinois.edu/article3_part2_3-201.html EmergencyResponseRecommendations: Theuniversitymaintainsguidelinesforemergencyresponses.Alistofrecommendationswhento evacuateandwhentofindshelterareavailableat: http://illinois.edu/cms/2251/general_emergency_response_recommendations_8_16_13_final.docx Floorplansforspecificbuildingsareavailableat: http://police.illinois.edu/emergencyplanning/floorplans/ StatementonAccommodations: Toobtaindisability-relatedacademicadjustmentsand/orauxiliaryaids,studentswithdisabilitiesmust contactthecourseinstructorandtheDisabilityResourcesEducationalServices(DRES)assoonas possible.TocontactDRESyoumayvisit1207S.OakStreet,Champaign,call333-4603(V/TTY),oremail [email protected]. AcademicIntegrity: “TheUniversityhastheresponsibilityformaintainingacademicintegritysoastoprotectthequalityof educationandresearchonourcampusandtoprotectthosewhodependuponourintegrity. ExpectationsofStudents.Itistheresponsibilityofeachstudenttorefrainfrominfractionsofacademic integrity,fromconductthatmayleadtosuspicionofsuchinfractions,andfromconductthataidsothers insuchinfractions.StudentshavebeengivennoticeofthisPartbyvirtueofitspublication.Regardlessof whetherastudenthasactuallyreadthisPart,astudentischargedwithknowledgeofit.Ignoranceisnot adefense.” Page4of6 TheUniversity’sfullacademicintegritypolicyisavailableat: http://studentcode.illinois.edu/article1_part4_1-401.html SemesterSchedule: InternationalTrade • Aug.23:InternationalEconomics:AnIntroduction. • Aug.25:WorldTrade:AnOverview. • Aug.30:InternationalTradeinPartialEquilibrium. • Sep.1:InstrumentsofTradePolicy. • Sep.2:Homework1due. • Sep.6:InternationalTradeinGeneralEquilibrium. • Sep.8:TheRicardianModelofTrade(I). • Sep.9:Homework2due. • Sep.13:TheRicardianModelofTrade(II). • Sep.15:TheHeckscher-OhlinModel(I). • Sep.16:Homework3due. • Sep.20:Exam1(inclass). • Sep.22:TheHeckscher-OhlinModel(II). • Sep23:Homework4due. • Sep.27:EconomiesofScaleandInternationalTrade. PaperAssignment1due. • Sep.29:FirmsinTheGlobalEconomy. • Sep.30:Homework5due. • Oct.4:ThePoliticalEconomyofInternationalTrade. • Oct.6:AHistoricalOverviewofInternationalTrade. • Oct.7:Homework6due. • Oct.11:Exam2(inclass). InternationalFinance • Oct.13:NationalIncomeAccountingforanOpenEconomy. • Oct.14:Homework7due. • Oct.18:TheBalanceofPayments. • Oct.20:TheAssetApproachtoExchangeRateDetermination. PaperAssignment2due. • Oct.21:Homework8due. • Oct.25:MoneyMarketsandExchangeRates. • Oct.27:ExchangeRateDeterminationintheLongRun. • Oct.28:Homework9due. • Nov.1:ThePurchasingPowerParityTheory. • Nov.3:TheRealExchangeRate. • Nov.4:Homework10due. • Nov.8:Exam3(inclass). • Nov.10:OpenEconomyMacroeconomicEquilibrium(I) • Nov.11:Homework11due. Page5of6 • • • • • • • • • • • Nov.15:OpenEconomyMacroeconomicEquilibrium(II) Nov.17:MacroeconomicPolicyinanOpenEconomy. Nov.18:Homework12due. Nov.22:Noclass(fallbreak). Nov.24:Noclass(fallbreak). Nov.29:FixedExchangeRateRegimes. Dec.1:AlternativeExchangeRateRegimes. Dec.2:Homework13due. Dec.6:InternationalMonetarySystems:AHistoricalOverview. PaperAssignment3due Dec.8:Readingday. Dec.12:FinalExam,1:30pm-4:30pm,locationTBA. Page6of6