Download International Economics II: International Monetary & Finance Economics

Course Syllabus:
International Economics II:
International Monetary & Finance Economics
UVM EC 146/FALL 2011/RM 110 JEFFRDS/MWF 11:45-12:35 PM
Prof: John F. Summa, PhD
Office: Old Mill, Rm. 229
Office Hours: MWF 3:00-3:50 (or by appointment)
Phone: (802) 846-7509 (c)
E-mail: [email protected]
Required Text:* International Economics (7th edition), Appleyard, et.al.
Required Supplemental Readings: Additional readings will be handed out
in class, placed on reserve or posted at Blackboard throughout the
semester to supplement sections of the required textbook.
* The required text has been ordered by UVM's bookstore and should be
available by the start of classes. New and used editions are available
through a number of online book vendors, such as Amazon.com and
CampusBooks.com.
Course Objectives: This course aims to provide students with a solid
understanding of the fundamentals of international monetary economics,
an increasingly important area of study given growing integration of the
world's national economies into a global economic system. Students will
acquire fluency with key global financial concepts and relationships, as
well as conventional macro models of open economies and related policy
issues. Additionally, and perhaps more importantly, students will be
encouraged to critically evaluate prevailing theories, and consider
alternative approaches found outside the mainstream body of thought.
Learning Methodology: Class lectures will follow closely the required
text, International Economics (Appleyard, et. al.). Students are
responsible for material found in the text (as outlined below) and all
material presented in lectures (lecture material sometimes go beyond
material found in the textbook – therefore attendance is essential to be
prepared for exams and homework assignments). The required supplemental
readings, to be placed on reserve, and uploaded to Blackboard when
possible, will provide additional perspectives on topics covered in the
required textbook.
Course Outline:**
I.
Introduction: The Global Economy Today
(Chap. 1, Week 1)
A. Patterns and composition of global trade
B. International monetary dimensions
C. Changes in international interdependence
II.
The International Monetary System – Past, Present, Future
(Chap. 29, Weeks 1-2)
A.
B.
C.
D.
Key features of an effective international monetary system
Historical evolution of the international monetary system
Purpose of the IMF – strengths and weaknesses
Alternative monetary arrangements and reform proposals
III. Pre-Classical and Classical Theories of Trade & Finance
(Chaps. 2-4, Weeks 2-3)
A.
B.
C.
D.
E.
Mercantilism vs. price-specie-flow mechanism (Chap. 2)
Smith and 'absolute advantage' in trade (Chap. 2)
Ricardo's 'comparative advantage' principle (Chap. 3)
Classical model in money terms (Chap. 4)
Wage rate limits and exchange rate limits (Chap. 4)
Midterm Exam #1: (Chaps 1-4, 29) Date: TBA
IV.
Balance of Payments Accounting
(Chap. 19, Week 4)
A.
B.
C.
D.
V.
The Foreign Exchange Market (FX)
(Chap. 20, Week 5)
A.
B.
C.
D.
VI.
Balance of payments account
Balance on current account
Merchandise trade balance account
International investment position
Understanding the FX market
Measures of the exchange rate
Hedging, speculating and arbitrage in FX markets
Spot market versus forward and futures markets
International Financial Markets and Instruments
(Chap. 21, Week 6)
A. Fundamentals of international financial markets
B. Interdependence of money markets, interest rates, and FX
C. Types and functions of international derivatives
VII. Monetary and Portfolio Balance Approaches to External Accounts
(Chap. 22, Week 7)
A.
B.
C.
D.
Supply and demand for money and exchange rates
Other financial assets and exchange rate determination
International payments positions and other financial assets
Exchange rate overshooting of equilibrium positions
VIII. Price Adjustments and Balance of Payments Disequilibrium
(Chap. 23, Week 8)
A. Exchange rate impact on trade, services and goods balances
B. Price elasticity of demand and FX market stability
C. Price adjustment mechanism under fixed or pegged exchange rates
Midterm Exam #2 (Chaps 19-23) Date: TBA
IX.
National Income and the Current Account
(Chap. 24, Week 9)
A. Foreign trade in a Keynesian income model
B. Impact on savings/investment relationship and multiplier
C. National income equilibrium vs. current account equilibrium
X.
Economic Policy in an Open Economy Under Fixed Exchange Rates
(Chap. 25, Week 10)
A. General equilibrium in the macro economy (IS/LM/BP model)
B. Impact of fiscal policy on income, trade, interest rates
C. Impact of monetary policy on income, trade, and interest rates
XI.
Economic Policy in an Open Economy Under Flexible Exchange Rates
(Chap. 26, Week 11)
A. Impact of fiscal policy on income, trade, and exchange rates
B. Impact of monetary policy on income, trade, and exchange rates
C. External economic shocks and flexible exchange rates
XII. Prices and Output in an Open Economy
(Chap. 27, Week 12)
A.
B.
C.
D.
Aggregate demand and supply and global transactions
Economic shocks and policy impact on prices and output
Macroeconomic adjustment under fixed vs. flexible exchange rates
Short-run and long-run impact of policy on output and prices
XIII. Fixed or Flexible Exchange Rates?
(Chap. 28, Week 13)
A. Differing impacts of fixed vs. flexible regimes
B. Macroeconomic shocks and exchange rate systems
C. Strengths and weaknesses of exchange rate systems
Final Exam (Chaps. 24-28); Fri. 12/16/2011 7:30-10:15/RM JEFFRD 110
** The instructor reserves the right to alter the course outline and
course requirements at any time.
Grading Policy: Grades are based on two mid-term exams (25% each),
a final exam (25% and cumulative), and homework exercises (25%).
Attendance Expectations: You are acquired to attend every class and will
be held responsible for material presented in class. Exams will be based
on readings/exercises and material presented in lectures. If you miss a
class, it is your responsibility to acquire the material presented and
assigned in that class. The Professor may assign in-class short essay
quizzes without notice related to assigned readings and lecture
material. The essay quizzes will count toward your exercises score.
Additionally, you may be held responsible for material presented in
class that is not found in the textbook, so attendance is essential for
maximizing your grade and class performance.
Email Policy: The instructor cannot guarantee a timely response to email inquiries/communication in terms of any course requirement
deadlines (inside of 48 hours), although the instructor does try to
respond to e-mail inquiries as quickly as possible.
Electronic Devices: No electronic devices are permitted during class
time unless pre-arranged with the professor.
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Integrity are any acts which would have the effect of unfairly promoting
or enhancing one's academic standing within the entire community of
learners. Such acts are serious offenses and will not be tolerated. Any
suspected violations of the Code will be forwarded to the Center for
Student Ethics & Standards.
Go to http://www.uvm.edu/~uvmppg/ppg/student/acadintegrity.pdf to read
the Code of Academic Integrity.
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