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MSc Economics

Year of entry: 2020

Course unit details:
International Macroeconomics

Unit code ECON60132
Credit rating 15
Unit level FHEQ level 7 – master's degree or fourth year of an integrated master's degree
Teaching period(s) Semester 2
Offered by Economics
Available as a free choice unit? Yes


The aim of the course is to provide rigorous training on some key topics in international macroeconomics. These topics include intertemporal models of the current account; capital flows and macroeconomic fluctuations; the transmission mechanism of monetary policy in an open economy in the presence of financial frictions; and dynamic stochastic general equilibrium (DSGE) models of open economies under imperfect capital mobility and financial frictions. Presentations will dwell on a series of fully-articulated models with proper micro foundations. The intuition behind key mathematical results, and their relevance for the real world, will be systematically emphasized.

Learning outcomes

Upon completion of this course, successful students will be able to:


a) show a clear understanding of some of the recent literature, both empirical and analytical, in international macroeconomics (e.g. on the causes of current account deficits, China’s trade surplus, and sudden floods in capital flows);


b) be able to evaluate critically some of the claims in the literature, particularly those related to the determinants of current account imbalances, the correlation between capital flows and the real exchange rate, and the role of financial frictions in the transmission mechanism of monetary policy in an open economy;


c) develop simple models of their own, from which they can derive original results, and strengthen analytical skills that may serve them eventually for a PhD Program in Economics, at Manchester University or elsewhere


Topic 1 (Lectures 1 to 3) – Two-Period Intertemporal Models of the Current Account

Topic 2 (Lectures 4 to 6) – Infinite Horizon Optimizing Models of Small Open Economies

Topic 3 (Lectures 7, 8 and 9) – The Monetary Transmission Mechanism in an Open Economy with Financial Frictions

Topic 4 (Lecture 10) – Open-Economy DSGE Models with Financial Frictions



Teaching and learning methods


Assessment methods

Method Weight
Written exam 100%

Recommended reading

Prior to the start of the class, students are encouraged to review key mathematical formulas and results provided in the following document:

Agénor, Pierre-Richard, Mathematical Formulas and Dynamic Optimization Techniques, unpublished, University of Manchester.

Students are also encouraged to refresh their memory on key National Accounts concepts and identities, as provided for instance in

Agénor, Pierre-Richard, The Economics of Adjustment and Growth, 2nd ed., Harvard University Press, Chapter 1, Sections 1.1 to 1.3.

Both of these documents will be uploaded on the course website a week before the course starts.

Study hours

Scheduled activity hours
Lectures 20
Independent study hours
Independent study 130

Teaching staff

Staff member Role
Pierre-Richard Agenor Unit coordinator

Additional notes

Pre-requisites: ECON60111 (Macroeconomic Theory)

Lecture: Tuesday 12-2pm

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