Download Academic paper : Globalization and the World Economy

Horst Siebert
Spring Semester 2008
1/16/2007
Globalization & the World Economy
Course Description: Takes a global view of economic processes and economic
structures in the world. Applies analytical and institutional concepts to practical
issues. Analyzes the real side of the global economy - world product and factor
markets, processes of economic growth, and the rise of China – , discusses the
monetary side - financial and currency crises and role of the IMF, and looks at the
institutional side of the world economy – the conflict between the national and the
multilateral order including the use of the global environment and global
institutional arrangements.
Prerequisites: Students should have had Microeconomics, Macroeconomics and
International Trade. International Monetary Economics is helpful. International
Trade may be taken simultaneously.
Exams: Three hour final written exam accounting for 60 percent of the final grade.
In addition, there will be a mid-term exam (in the sixth week, April 1st) accounting
for 30 per cent of the final grade. Class participation: 10 percent.
(If the class is very small (less than seven), students will be asked to present
aspects of the topics that are on the agenda in class instead of the mid-term exam.
The presentation in class is about 30 minutes on the basis of an eight page paper.
The presentation and the paper account for 30 per cent of the final grade.)
Reading requirement: Siebert, The
World Economy. Please read the
chapters before you come to class
1.
The global view. Trends in the world economy
Part I
Chapter 1
A paradigm of the world economy
How do countries interact? / Exchange of goods, services, investment flows / Role of goods and
factor markets/ How do we explain the process of economic growth?
2. The World product markets
2.1 Equilibrium in the world product markets
2.2 Increase in world labor supply and product market equilibrium
2.3 The most important theorems
2.4 Monopolistic competition/ Intra-sector trade
2.5 Hierarchy versus markets
3. The world factor markets
3.1 The world labor market
3.2 The world capital market
3.3
The world market for knowledge and technology
3.4
Market for natural resources, factor price frontier, economic shocks
Chapter 2
Chapter 3
–2–
4. Growth processes in the world economy*
4.1
Growth in open economies
4.2
Convergence versus divergence
Part II.
China – the new global player (two sessions)
5. 1 Economic growth, balance of payments, exchange rate policy
5.2 Property rights, institutional deficits
Part III.
Chapter 4
My two
papers on
China 2007
Money and Financial Markets in the World Economy
Which role does money play? / Is money neutral?/ Why do we have currency crises? / Why
financial crises? / What to do about them?
Chapter 5
6. The money market in the world economy
6.1
Global monetary equilibrium
6.2
Purchasing power parity
6.3
Overshooting of the exchange rate
6.4
Interest rate parity
Chapter 7
7 Financial crises *
7.1
An optimal portfolio
7.2
Historical Examples
7.3
Speculative bubbles
7.4
The Japanese bubble
8. Currency crises
8.1
Optimal portfolio with different currencies
8.2
Mechanisms of a currency crisis
8.3
Nominal and real exchange rate
8.4
Some currency crises
8.5
How to prevent currency crises: The Role of the IMF
Part IV.
Chapter 8
Chapter 9
The National Interest versus a World Order
Where can the national interest and the multilateral order clash? (Trade and protectionism
/Subsidies as a distortion/ Do industrial countries impede the growth prospects of developing
countries? / Regionalism versus the multilateral order / Locational competition / National
environmental policy versus the global commons/ The institutional design of WTO / As a reminder:
national financial instability versus global stability.
9. Protectionisms versus free trade*
9.1
National interest
9.2.
Some arguments for tariffs - Effects of tariffs - The optimal tariff
9.3
Quantitative restrictions, Non-tariff barriers to trade
9.4
Strategic trade policy
9.5
Arguments for free trade
Chapter 14
–3–
10. Locational competition of nation states versus international
harmonization
11.
National versus international environmental policy
Chapter 15
Chapter 16
12. Discussion in class: The fears of the NGO’s
(Alternative: How to integrate the developing countries?)
Chapter 17
13. Strategic Bevahior versus an institutional framework for the world
economy
13.1 Competing paradigms for the world economy
13.2 The world trade order (WTO) and its main components
13.3 A world financial order
13.4 An institutional arrangement for the environment
* I will use these chapters as a time buffer; there may not be time enough to study these issues. They then are
not part of the exam.
References
Required reading:
Horst Siebert (2007), The World Economy. A global analysis, Revised and enlarged third edition. London and New
York, Routledge.
Horst Siebert (2007), China: Coming to grips with the new global player, The World Economy, Vol. 30
(6), 893-922.
Horst Siebert (2007), „China – Opportunities of and Constraints on the New Global Player, CESifo Forum, 4, 52-61.
The following references direct you to sources in the literature and to data.
Additional Basic Literature
Bhagwati, J. N. (2004). In Defense of Globalization., New York, Oxford University Press.
Krugman, P.R. and M. Obstfeld (2006). International Economics, Theory and Policy. 7th ed, Boston, Mass:
Pearson/Addison-Wesley.
Siebert, H. (Ed,), (2003). Global Governance: An Architecture for the World Economy. Berlin, Springer
Stiglitz, J.E., Charlton, A (2005). Fair Trade for All. How Trade Can Promote Development. Oxford. Oxford University
Press.
Stiglitz, J (2006). Making globalization work. New York: Norton.
Wolf, M. (2004). Why Globalization Works, New Haven, Conn.: Yale University Press.
Data
Bank of International Settlements (2007). 77th Annual Report. Basel, Switzerland.
http://www.bis.org/publ/arpdf/ar2007e.pdf?noframes=1
ECB, Monthly Bulletins
http://www.ecb.int/pub/mb/html/index.en.html
–4–
Federal Reserve System (Fed) (2007).Annual Report 2005. Washington, DC.
http://www.federalreserve.gov/boarddocs/rptcongress/annual06/default.htm
Federal Reserve System (Fed). Quarterly Bulletin.
http://www.federalreserve.gov/pubs/bulletin/default.htm
International Labour Organisation (2006), Yearbook of Labour Statistics 2006 (Library Call no. R 331 INT)
IMF Committee of Balance of Payments Statistics (2006). Annual Report 2005. Washington, DC.
http://www.imf.org/external/pubs/ft/bop/2005/ar/bopcom05.pdf
IMF (2006). Direction of Trade Statistics Yearbook 2006. (Library Call Number R 382 DIR)
IMF (2006). International Financial Statistics. CD-Rom. October 2007. (ask at the library desk)
IMF (2007). World Economic Outlook October 2007 Washington, DC.
http://www.imf.org/external/pubs/ft/weo/2007/02/pdf/text.pdf
OECD Publication Search (access to a wide variety of specialized reports by search of subject area)
http://www.oecd.org/publications/0,2743,en_2649_201185_1_1_1_1_1,00.html
OECD (2007). Economic Outlook No. 80. Paris, France.
UNCTAD (2007). World Investment Report 2007 Transnational Corporations, Extractive Industries and Development
http://www.unctad.org/en/docs/wir2007_en.pdf
United Nations 2006, Statistical Yearbook, no 50 (Library Call Number: R 310 UNI)
United Nations (2006). National Accounts Statistics 2004-2005 (Library Call Number: R 336 UNI)
World Bank (2007). World Development Report 2008: Agriculture for Development . Washington, D.C.
http://siteresources.worldbank.org/INTWDR2008/Resources/WDR_00_book.pdf
World Bank (2006). World Development Indicators. Online Data Base. Washington, DC.
http://www.worldbank.org/data/onlinedatabases/onlinedatabases.html.
WTO (2007). International Trade Statistics 2007. Geneva, Switzerland
http://www.wto.org/english/res_e/statis_e/its2007_e/its07_toc_e.htm
World Trade Report 2006. Geneva, Switzerland.
http://www.wto.org/English/res_e/booksp_e/anrep_e/world_trade_report06_e.pdf
References to Individual Chapters for further Research
Ad 1
World
Bank
(2007).
World
Development
Report
2008:
Washington,
D.C.
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTWDRS/EXTWDR2008/0,,menuPK
:2795178~pagePK:64167702~piPK:64167676~theSitePK:2795143,00.html (Statistical Indicators).
Ad 2
Freeman, R.B. (1995). Are Your Wages Set in Beijing?. Journal of Economic Perspectives 9: 15–32.
Grossman, G.M. and E. Helpman (1995). Technology and Trade. In G. Grossman and K. Rogoff (Eds.): Handbook of
International Economics III. Amsterdam. The Netherlands.
Grossman, G.M. and E. Helpman (1991). Innovation and Growth in the Global Economy, 7th ed .Cambridge Mass. MIT
Press
Helpman, E. and P. Krugman (1989), Trade Policy and Market Structure, Cambridge Mass. MIT Press
Rogoff, K. (1996). The Purchasing Power Parity Puzzle. Journal of Economic Literature, 34 (2): 665–668.
Ad 3
Bosworth, B. P. (1993). Saving and Investment in a Global Economy. Washington, DC: Brookings Institution.
Georgopoulos, G. J. and W. Hejazi (2005). Feldstein-Horioka Meets a Time Trend. Economic Letters, 86 (3): 353-357.
Feldstein, M., and C. Horioka (1980). Domestic Saving and International Capital Flows. Economic Journal, 90: 314–
329.
Ad 4
Barro, R. J. and X. Sala-I-Martin (2004). Economic Growth. 2nd Ed. Cambridge,Mass . MIT Press
Blanchard, O. and S. Fischer (1989). Lectures on Macroeconomics. Cambridge Mass. MIT Press Chapter 2.
Helpman, E. (2004). The Mystery of Economic Growth . Cambridge, Mass. Belknap Press of Harvard University Press
Obstfeld, M. and K. Rogoff (1996). Foundations of International Macroeconomics. Cambridge Mass. Chapter 7.
Maddison, A. (2001). The World Economy: A Millennial Perspective. Paris, France: Development Centre of OECD.
Ad 5
Barnett, S. A., E. S. Prasad (eds.) (2004). China’s Growth and Integration into the World Economy: Prospects and
Challenges. Washington, DC: IMF.
–5–
Blanchard, O. J., F. Giavazzi (2005). Rebalancing Growth in China. CEPR Discussion Paper No. 5403. London, UK.
DeLisle, J. (2004). Property Rights Reform in China. Conference Presentation, The Future of Political Reform in China,
January,2004
Available:
29th
<http://www.fpri.org/transcripts/lecture.20040126.delisle.chinapropertyrights.html>.
Dunaway, S., X. Li (2005). Estimating China’s “Equilibrium” Real Exchange Rate. IMF Working Paper No. 05/202.
http://www.imf.org/external/pubs/ft/wp/2005/wp05202.pdf
Holz, C. A. (2006). Why China’s New GDP Data Matters. Far Eastern Economic Review, 169 (1): 54-56.
Huang, P., S. Zhan (2005). Internal Migration in China: Linking it to Development. Regional Conference on Migration
and Development in Asia. 14-16 March.
IMF (2006). People’s Republic of China. Staff Report for 2006 Article IV Consultation. Washington, DC.
http://www.imf.org/external/pubs/ft/scr/2006/cr06394.pdf
Pei, M. (2006). The Dark Side of China’s Rise. Foreign Policy Magazine, March/April.
http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=18110
Horst Siebert (2007), China: How to cope with the new global player, The World Economy, Vol. 30 (6), 893-922.
Horst Siebert (2007) , China – Opportunities and Restraints of the new global player, forthcoming in ifo (December)
Horst Siebert (2007) Asia’s Economic and Technological Outlook, in: Sen, A (ed) Asia Changing the World,
Bertlesmann, 2007
Zhao, Z. (2005). Migration, Labor Market Flexibility and Wage Determination in China: A Review. Developing
Economies, 43 (2): 285-312.
World Bank (2007a). China at a Glance. September. Washington, DC. http//worldbank.org/AAG/chn_aag. Pdf
World Bank Office, Beijing (2007b). Quarterly Update. September 2007, at:
http://siteresources.worldbank.org/CHINAEXTN/Resources/318949-1121421890573/cqu_09_07.pdf
Ad 6, 7 ,8
Dornbusch, R. (1976). Expectations and Exchange Rate Dynamics. Journal of Political Economy 84: 1161–1176.
Eichengreen, B. J. (2006). How to Really Reform the IMF. Speech held on February 23.
http://www.econ.berkeley.edu/~eichengr/reform.pdf
IMF (2006). Global Financial Stability Report: Market Developments and Issues. Washington, DC.
http://www.imf.org/external/pubs/ft/GFSR/2006/02/index.htm
Rogoff, K. (1996). The Purchasing Power Parity Puzzle. Journal of Economic Literature, 34 (2): 665–668.
Rogoff, K. (1999): International Institutions for Reducing Global Financial Instability, NBER Working Paper No. 7265.
Weller, P.A. (1992). Rational Bubbles. In P. Newman, M. Milgate and J. Eatwell (Eds.): The New Palgrave Dictionary
of Money and Finance. London. : Macmillan Press.
Ad 9
Brander, J.A. (1995). Strategic Trade Policy. In G. Grossman and K. Rogoff (Eds.): Handbook of International
Economics III. Amsterdam. The Netherlands
Brown, D.K, A. Deardorff and R. Stern (2002). Multilateral, Regional, and Bilateral Trade-Policy Options for the
United States and Japan, Discussion Paper 490, University of Michigan: School of Public Policy.
Ad 10
Siebert, H. (2006). Locational Competition: A neglected Paradigm in the International Division of Labour. World
Economy, 29 (2): 137-159.
Ad 11
Siebert, H. (2008). Economics of the Environment: Theory and Policy.7. Ed, Berlin: Springer.
Ad 13
Bhagwati, B (2003). Coping with Anti-Globalization, in H. Siebert (Ed). Global Governance: An Architecture for the
World Economy, 23-41
Siebert, H (2003). On the Fears of the International Division of Labor. In H. Siebert (Ed): Global Governance: An
Architecture for the World Economy. Berlin, Germany: Springer. 3-21
Stiglitz, J. (2002). Globalization and Its Discontents, London.
Wolf, M. (2004). Why Globalization Works, Yale University Press.
Ad 17
–6–
Krueger, A. O. (ed.) (1998). The WTO as an International Organization. Chicago, IL: University of Chicago Press.
Staiger, R.W. (1995). International Rules and Institutions for Trade Policy. In G. Grossman und K. Rogoff (Eds.):
Handbook of International Economics III. Amsterdam.
WTO (2004). The Future of the WTO. Report by the Consultative Board to the Director-General Supachai
Panitchpakdi, WTO Geneva http://www.wto.org/english/thewto_e/10anniv_e/future_wto_e.pdf
Horst Siebert (2007a). How Global Rules are established and stabilized. Kiel Working Paper 1388,December. 36 pp
Horst Siebert (2007b). Reforming the IMF. Occasional Paper. Konrad Adenauer Foundation. Washington. February.
Horst Siebert (2007). Rules for Border-Crossing Factor Movements. Kiel Working Paper 1381. December36 pp.