Economics 441/541-001: International Monetary Theory and Policy (Winter, 2017)

 

 

Course Time and Place:            TTh 10:00 – 11:50, Cramer Hall 324

Instructor:                                      Hiro Ito, Professor of Economics

Office:                                            Cramer Hall 241-F

Email:                                             ito@pdx.edu

Phone:                                            x5 – 3930

Office Hours:                                TTh 12:00-13:00, or by appointment

 

The course syllabus is available here.

 

 

Teaching Assistant

Kritika Kumari kkumari@pdx.edu

OHs: Monday: 1 – 4pm; Tuesday, Thursday: 1 – 2pm

 

 

Course Material

The required textbook for this course is:

Krugman, Paul, Maurice Obstfeld, and Marc Melitz, International Economics – Theory and Policy, Ninth Edition. Addison Wesley (KOM).

 

If you desire or need to brush up your introductory or intermediate macro, the following standard textbooks are suitable.

<Introductory macro>

William J. Baumol and Alan S. Blinder, Macroeconomics – Principles and Policy, Thomson South-Western (BB).

<Intermediate macro>

Olivier Blanchard, Macroeconomics 3rd Edition, Prentice-Hall (B).

 

If you are interested in exploring more advanced material, you are highly encouraged to read Feenstra and Taylor’s International Economics .

 

Other reading materials such as journal and magazine articles are occasionally distributed in class or available on this page.

 

It is suggested that students develop the habit of reading newspapers and journals such as The Financial Times and The Economist.

 

Lecture Notes

Notes for Chapter 13

Notes for Chapter 6

Notes for the World Economy since the 1980s

Notes for the Euro

Developing Countries and International Macroeconomics

 

Homework assignments

Homework #1

Answer Keys to Homework #1

Homework #2

Answer Keys to Homework #2

Homework #3

Answer Keys to Homework #3

Homework #4

Answer Keys to Homework #4

Homework #5

Answer Keys to Homework #5

Homework #6

Answer Keys to Homework #6

 

Class schedule and reading assignments

The readings with an asterisk are required, and those with § are required for graduate students.

 

Week 1

Introduction and review of macroeconomics

        <for review> Baumol & Blinder (BB): Ch. 7,8,10,12,13 & 17; Blanchard(B): Ch. 18

 

*Krugman, Obstfeld, Melitz (KOM): Ch. 13

National Income Accounting and the Balance of Payments

*Cavallo, M. (2004) “Exchange Rate Movements and the U.S. International Balance Sheet,” FRBSF Economic Letter. (CW)

*Tille, C. 2003. “The impact of exchange rate movements on U.S. foreign debt”, Current Issues in Economics and Finance, vol 9, no 1, January.

 

Week 2

*KOM: Ch. 6     Section on International Borrowing and Lending and Appendix

§KOM: Ch. 6 (graduate students should read the whole chapter)

 

*KOM: Ch. 14   Exchange Rates and the Foreign Exchange Market: An Asset Approach

        Blanchard (B): Ch. 19

 

Week 3

*KOM: Ch. 14        continued

 

        *KOM: Ch. 15        Money, Interest Rates, and Exchange Rates

         B: Ch. 20

§Frankel, J. and K. Froot (1990). “Chartists, Fundamentalists, and Trading in the Foreign Exchange Market,” American Economic Review, pp.181 – 185. (CW)

§Frankel, J. and A. Rose (1994). “A Survey of Empirical Research on Nominal Exchange Rates,” NBER Working Paper #4865. (CW)

 

Week 4

*KOM: Ch. 16         Price Levels and the Exchange Rate in the Long Run

§Cubmy, R. (1996). “Forecasting Exchange Rates and Relative Prices wit the Hamburger Standard: Is What You Want What You Get With McParity?” NBER Working Paper #5675. (CW)

 

        *KOM: Ch. 17         Output and the Exchange Rate in the Short Run

 

Week 5

*KOM: Ch. 17         continued

 

        Review on Ch. 6, 13 – 17

 

Week 6

February 16 (Thursday): Midterm Exam (Ch. 6, 13-17)

 

*KOM: Ch. 18         Fixed Exchange Rates and Foreign Exchange Intervention

         B: Ch. 21

 Krugman, P. (1979). “A Model of Balance-of-Payments Crises,” Journal of Money, Credit and Banking, Vol. 11, No.3, pp.311-325. (CW)

 Glick and Hutchison (1989). “Exchange Rates and Monetary Policy,” Economic Review, Federal Reserve Bank of San Francisco, Vol. 2. (CW)

 

Week 7

*KOM: Ch. 19         The International Monetary System: A Historical Overview

§Nurkse, R. (1945). “Conditions of International Money Equilibrium,” Essays in International Finance, No. 4 (Spring). (To be distributed in class)

§Krugman, P. (1993). “What Do We Need to Know About the International Monetary System?” Essays in International Finance, No. 4 (July). (distributed)

 

Week 8

*KOM: Ch. 19    Continued

 

*KOM: Ch. 21    Optimum Currency Areas and the Euro

*Spiegel, M. (2004) “Monetary and Financial Integration: Evidence from the EU,” FRBSF Economic Letter. (CW)

Eichengreen, B. A. Rose, and C. Wyplosz (1994). “Speculative Attacks on Pegged Exchange Rates: An Empirical Exploration with Special Reference to the European Monetary System,” NBER Working Paper #4898. (CW)

“Profligacy is not the problem,” The Economist, September 17, 2011.

“After the fall: The aftermath of disaster is all the more frightening for being incalculable,” The Economist, September 17, 2011.

"Reading the Future of the Internationalization of the Renminbi and its Acceptance as a SDR Currency," Research Institute of Economy, Trade, and Industry Column 327 (in both English and Japanese; January 19, 2016).

"Limitations of the International Monetary System and the Rise of China’s Renminbi," Research Institute of Economy, Trade, and Industry Column 317 (in both English and Japanese; August 17, 2015).

 

 

Weeks 9 and 10

        *KOM: Ch. 22         Developing Countries: Growth, Crisis, and Reform

          

*Aizenman, J. and Hiro Ito. 2013. “The Impossible Trinity, the International Monetary Framework and the Pacific Rim”. In I. N. Kaur and N. Singh ed., Handbook of the Economics of the Pacific Rim (Oxford University Press, 2013).

§Aizenman, J., M.D. Chinn, and H. Ito (2008). “Assessing the Emerging Global Financial Architecture: Measuring the Trilemma's Configurations over Time.” NBER Working Paper Series, #14533.

*Fischer, Stanley (1998). “Lessons from a Crisis,” The Economist (October 10). (CW)

§Kaminsky, Graciela L. and Carmen M. Reinhart (1999). “The Twin Crises: The Causes of Banking and Balance-Of-Payments Problems” American Economic Review, Vol. 89, No. 3 (June), pp. 473-500.

§Rodrik, D. (2000). “How Far Will International Economic Integration Go,” Journal of Economic Perspective (Winter). (CW)

Rogoff, Kenneth (1999). “International Institutions for Reducing Global Financial Instability,” NBER Working Paper #7265. (CW)

*Coden, Max (2007). “The International Current Account Imbalances: A Sceptical View,Economic Affairs, 2007, vol. 27, issue 2, pages 44-48.

*Valderrama, D. (2008). Are Global Imbalances Due to Financial Underdevelopment in Emerging Economies?” FRBSF Economic Letter. Number 2008-12,April 11.

*Frankel, J. 2011. “Historical Precedents for Internationalization of the RMB,” A CGS/IIGG Working Paper. Washington, D.C.: Council on Foreign Relations. (CW)

*Ito, Takatoshi. 2011. “The Internationalization of the RMB: Opportunities and Pitfalls,”CGS/IIGG Working Paper. Washington, D.C.: Council on Foreign Relations. (CW)

 

 

The final exam will be held at 10:15 – 12:05 pm on March 21, Tuesday.

 

 

March 16, 2017