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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. How the globalisation of banking affects the internatinal transmission of financial shocks;

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

 

Syllabus

Syllabus (9 weeks)

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

Topic 4. Financial Globalisation: Global Banking, Capital Flows, and Macroeconomic Stability. [1 session]

Topic 5. International Coordination of Macroeconomic Policies. [2 sessions]

Tutorials (5 sessions, from Week 4 to Week 8)

Intellectual skills

(i) problem-solving skills;

(ii) skills of analysis, and the use of analytical models;

(iii) the evaluation and critical analysis of arguments, theories and policies;

(iv) understand and evaluate policy-oriented publications on international macroeconomic issues.

Practical skills

Independently locate and assess relevant literature, and to draw on these to develop understanding and to construct arguments.

Transferable skills and personal qualities

(i) select and deploy relevant information;

(ii) communicate ideas and arguments in writing;

(iii) apply skills of analysis and interpretation; (iv) manage time and work to deadlines.

Assessment methods

20% Mid-term exam, Week 5.

Online, multiple choice questions on taught material. Graded on 20 points (2 points per question).

80% Exam, June 2021.

48-hours open book exams (not timed). 2 out of 3 open questions to answer (maximum of 200 words), and a mathematical problem to solve, based on the FF-GG-XX model. Graded on 80 points (10 points per question, 60  points for the problem).

 

Overall grade on 100 points.

Feedback methods

.Piazza, virtual office hours

Recommended reading

General References

Robert C. Feenstra, and Alan M. Taylor, International Macroeconomics, 4th ed., Macmillan. 2017. Hereafter FT.

Pr. P.-R. Agénor, “The FF-GG-XX Model for Macroeconomic Policy Analysis in an Open Economy,” Technical Manual, University of Manchester. Hereafter TM

General References, by Topic

Topic 1: FT Chapter 5.

Topic 2: FT Chapters 2 and 4.

Topic 3: TM (mandatory reading, except for Section 4 and Appendix).

Topic 4: FT Chapter 6.

Topic 5: IMF, G-20 Surveillance Note, IMF 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 2

Monetary approach to exchange rate determination: see FT, Chap. 3.

Topic 3<

Study hours

Scheduled activity hours
Lectures 18
Tutorials 5
Independent study hours
Independent study 77

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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