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雷达卡
Course Outline
Instructor: Li Xiaojie
Office: 312 Administration and Education Hall
Office Hours: Tuesday 3:00 pm-4:00pm
Email: lxj8926@mail.shufe.edu.cn
Main Text:
P. Krugman and M. Obstfeld, International Economics: Theory and Policy, 6th edition, Published by Tsinghua University Publishing House, 2004
Other books and materials:
Dominick Salvaltore,International Economics(8th Edition), Published by Tsinghua University Publishing House 2004-06Barry Eichengreen (2006), .Global Imbalances: The Blind Men and the Elephant,.
Brookings Policy Brief 1, (January)
http://www.brookings.edu/views/papers/200601_iiep_eichengreen.pdf
Y.Y. Reddy (2006), .Foreign Exchange Reserves: New Realities, New Options,.
(September), http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=300
Class Hour:
3 class hour per week, 51 total class hours
Share of Total Points
The grade for this course will be based on two components: a class presentation(40%), 60% final exam
Purposes:
This is a course in the field of international economics. The course is an introduction to macroeconomic policy in an open economy. It focuses on the main concepts and methods of international finance and illustrates them with application drawn from the real world. It emphasizes the exchange rate theory and the experienced of international economic policy coordination. It will help students to understand the global economic problems, such as global trade imbalance, Renminbi exchange rate problem. Student who are thinking of graduate work in economics might find this course is a good choice.
The Main content
Chapter 12 National Income Accounting and the Balance of Payment
This chapter introduces two related and essential tools. The first is national income accounting and the second tool is balance of payments accounting.We will examine the relationship between National saving, investment and the current account.The BOP accounts also shows the connection between foreign transactions and national money supplies.
Chapter 13 Exchange Rates and the Foreign Exchange Market: An Asset Approach
This chapter aims at understanding the role of exchange rates in international trade and how exchange rates are determined by the interest rate and the expected future exchange rate. Firstly we will learn how exchange rate allows us to compare the prices of different countries’goods and services. Secondly, it describes the international asset market in which currencies are traded and show how equilibrium exchange rate are determined in that market.Finally it shows how today’s exchange rate responds to change in the expected future values of exchange rates.
Chapter 14 Money, Interest Rate and Exchange Rate
This chapter is a first step to build an economic model that links exchange rates,interest rates,and other important macroeconomic variables.Therefore it is natural to begin a deeper study of exchange rate determination with a discussion of money supply and money demand.Then we look at how monetary factors influences output prices along with interest rates.It can be used to examine how equilibrium interest tares are determined and combine the model of interest rate determination with the interest parity condition to study the effects of monetary shifts on the exchange rate. Finally we take a look at the long-term effects of monetary changes on output prices and future exchange rates.
Chapter 15 Price Levels and the Exchange Rate in the Long Run
This chapter develops a model of long-run exchange rate behavior.We begin our analysis by discussing the theory of purchasing power parity,which explains movements in the exchange rate between two countries’currencies by changes in the countries’price level. Also we will examine why PPP may fail to give accurate long-run predictions and show how the theory must be modified. Finally, we look at extended PPP theory to predict about how changes in money and output markets affect exchange and interest rates.
Chapter 16 Output and the Exchange Rate in the Short Run
This chapter builds a model that explains the short-run behavior of all the important macroeconomic variables in an open economy: a theory of how the output market adjusts to demand changes when product prices in the economy are themselves slow to adjust.Then we use our short-run model to examine how macroeconomic policy tools affect output and the current account and how those tools can be used to maintain full employment.
Chapter 17 Fixed Exchange Rates and Foreign Exchange Intervention
In this chapter we study how central banks intervene in the foreign exchange market to fix exchange rates and how macroeconomic policies work when exchange rates are fixed.The chapter will help us understand the role of central bank foreign intervention in the determination of exchange rates under a system of managed floating.
Chapter 18 the International monetary System, 1870-1973
This chapter reviews the international monetary system before 1973. The author focuses on macroeconomic policy in an open economy. There are two policy goals in open economy including internal balance and external balance. The two policy goals may conflicts under certain economic environment, so it is hard to fulfill this two conflicting goals. This chapter first looks at how the gold standard functioned in practice before World War I, examines how well it enabled contries to attain goals of internal and external balance, then it analyses policy options under the Bretton Woods system and discusses the external balance problem of the United States during nineteen seventies.
Chapter 19 Macroeconomic Policy and Coordination under Floating Exchange rates
This chapter discusses about the main arguments in favor of floating exchange rate: greater autonomy in managing national economy, removing the asymmetries of the Bretton Wood system and eliminating the fundamental disequilibriums. At the same time the critics of floating rate advances several counterarguments. Between 1973-1980 floating rates seemed on the whole to function well, however between 1980-1985 under floating rate, United States experienced excessive external and internal imbalance. Therefore, the experience of floating does not fully support either the early advocates of that exchange rate system of its critics.
Chapter 20 Optimum Currency Areas and the European Experience
This chapter focuses on Europe’s experience of monetary unification to illustrate the economic benefits and costs of fixed exchange rate agreements and more comprehensive currency unification schemes. The effects of joining a fixed exchange rate agreement are complex and depend crucially on microeconomic and macroeconomic factors. The discussion of Europe will throw light not only on the forces promoting greater unification of national economies but also on the forces that make a country think twice before giving up completely its control over domestic monetary policy.
Chapter 21 the Global Capital Market: Performance and Policy Problems
This chapter discusses three main questions about the international capital market: first, how has this well –oiled global financial network enhanced countries’ gains from international trade? Second, what caused the rapid growth in international financial activities that have occurred sine the early 1960s? third, how can policymakers minimize problems raised by a worldwide capital market without sharply reducing the benefits it provides?
Chapter 22 Developing Countries: Growth, Crisis, and Reform
This chapter studies the macroeconomic problems of developing countries and the repercussions of those problems on the developed world. Although the insight from international macroeconomics gained in previous chanters also apply to developing countries, the distinctive problems those countries have faced in their quest to catch up to the rich economies warrant separate discussion.. in addition, the lower income levels of developing areas make macroeconomic sumps there even more painful than in developed economies, with consequences that can threaten political and social cohesion.
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