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BAEcon Development Studies and Social Statistics

Year of entry: 2021

Course unit details:
Macroeconomics 4

Unit code ECON20032
Credit rating 10
Unit level Level 2
Teaching period(s) Semester 2
Offered by Economics
Available as a free choice unit? Yes

Overview

This one-semester course in international macroeconomics aims to provide students with the theoretical tools and empirical facts for understanding and thinking critically about macroeconomics in an international context. At the end of the term students will be able to interpret some key international macroeconomic policy issues, presented in policy-oriented publications and the popular press, using a new core theoretical framework where banks play a prominent role, and to understand how national macroeconomic policy challenges intersect with international economic issues – including financial globalization and the COVID-19 pandemic.

Pre/co-requisites

Unit title Unit code Requirement type Description
Macroeconomics 3 ECON20031 Co-Requisite Compulsory
Adv Maths - BAEcon & BSc Econ ECON10071 Pre-Requisite Compulsory
Advanced Mathematics ECON20071 Co-Requisite Compulsory
ECON20032 Prerequisites: ECON20031 AND (ECON10071 or ECON20071)

ECON20032 Prerequisites: C: ECON20031 and P: ECON10071 or C: ECON20071

Aims

This one-semester course in international macroeconomics aims to provide students with the theoretical tools and empirical facts for understanding and thinking critically about macroeconomics in an international context. At the end of the term students will be able to interpret some key international macroeconomic policy issues, presented in policy-oriented publications and the popular press, using a new core theoretical framework where banks play a prominent role, and to understand how national macroeconomic policy challenges intersect with international economic issues – including financial globalization and the COVID-19 pandemic.

Learning outcomes

Knowledge and Understanding:

At the end of this course students should be able to understand:

1.    key concepts of national accounts in an open economy;

2.    the functioning of the foreign exchange market and the role of interest parity conditions in determining fluctuations in national currencies;

3.    how fiscal and monetary policies affect macroeconomic aggregates, including output, prices, and the current account, as well as exchange rates, in an open economy where banks play a critical role in the financial system;

4.    the benefits of coordination of international macroeconomic policies in response to global shocks, including the COVID-19 pandemic.

 

Syllabus

  1. The course will focus on the following topics:

    Topic 1. National Accounts and the Balance of Payments. [1 session]

    Topic 2. Exchange Rates and the Foreign Exchange Market. [1 session]

    Topic 3. Financial Globalization: Global Banking and Capital Flows. [2 sessions]

    Topic 4. Macroeconomic Policies in an Open Economy: The FF-GG-XX model. [4 sessions]

    Topic 5. International Coordination of Macroeconomic Policies: Global Responses to COVID-19 [1 session]

    Tutorials (5 sessions)

    Session 1. National accounts and the balance of payments.

    Session 2. Capital flows: structure and determinants.

    Session 3. Construction of the FF-GG-XX open-economy model under fixed and flexible exchange rates.

    Session 4. Fiscal and monetary policy analysis in the FF-GG-XX model.

    Session 5. Transmission of external shocks in the FF-GG-XX model.

Assessment methods

80% Exam  

20% Coursework (online submission – short answers to questions on taught material)      

Feedback methods

.

Recommended reading

General Reference

Robert C. Feenstra, and Alan M. Taylor, International Macroeconomics, 4th Edition, Worth Publisher. 2017. Hereafter FT.

Key References, by Topic

Topic 1: FT Chapter 5.

Topic 2: FT Chapters 2 and 4.

Topic 3: FT Chapter 6.

              World Bank, Banking without Borders (2018).[1]

             McKinsey, The New Dynamics of Financial Globalization (2017).[2]

Topic 4: Pr. Agénor, “The FF-GG-XX Model for Macroeconomic Policy Analysis in an

              Open Economy,” Technical Manual, University of Manchester (January 2021).

Topic 5: World Bank, Global Productivity: Trends, Drivers, and Policies, World Bank

              Publications (Washington DC: 2020).

Beyond the Classroom: Supplementary Readings

Topic 1

The US current account deficit and twin deficits

https://www.imf.org/external/pubs/ft/fandd/basics/current.htm

Topic 3

Benefits and costs of capital account liberalisation

https://www.imf.org/external/pubs/ft/fandd/basics/capital.htm

Topic 4

The AA-DD-XX model: FT Chapter 7; see Supplementary Technical Material and simulation programme on Blackboard.

Topic 5

Financial integration and international financial spillovers

https://www.bis.org/publ/bppdf/bispap97.htm

International macroprudential policy response to cross-border bank capital flows

https://www.bis.org/publ/bppdf/bispap97.htm

Study hours

Independent study hours
Independent study 0

Teaching staff

Staff member Role
Pierre-Richard Agenor Unit coordinator

Additional notes

For every 10 course unit credits we expect students to work for around 100 hours. This time generally includes any contact times (online or face to face, recorded and live), but also independent study, work for coursework, and group work. This amount is only a guidance and individual study time will vary.

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