BAEcon Economics and Philosophy

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 the ongoing fight by central banks to bring inflation under control.

ECON20032 Prerequisites: ECON20031 AND (ECON10071A OR ECON10071B OR ECON20071)

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

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 national and 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 the ongoing fight by central banks to bring inflation under control.

 

Provisional 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. [5

sessions]

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

Topic 5. International Coordination of Macroeconomic Policies. [1 session]

Tutorials (5 sessions)

Session 1. Structure of the FF-GG-XX model. Derivation of the GG and XX curves and solution of the FF-GG-XX model under fixed exchange rates.

Session 2. Policy analysis and transmission of external shocks in the FF-GG-XX model under fixed exchange rates.

Session 3. Derivation of the FG and XX curves, and solution of the FF-GG-XX model under flexible exchange rates.

Session 4. Policy analysis and transmission of external shocks in the FF-GG-XX model

Session 5. Application: Fighting high inflation
 

 

General References

Robert C. Feenstra, and Alan M. Taylor, International Macroeconomics, 5th ed.,

Macmillan. 2021. Hereafter FT.

Pr. P.-R. Agénor, "The FF-GG-XX Model for Macroeconomic Policy Analysis in an Open

Economy," Technical Manual.

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: Technical Note (optional reading). 

Synchronous activities (such as Lectures or Review and Q&A sessions, and tutorials), and guided self-study

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 international transmission of financial shocks;

5. The benefits of international coordination of macroeconomic policies in response to global shocks.

(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.

(i) independently locate and assess relevant literature, and to draw on these to develop understanding and to construct arguments.

(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;

(v) use ICT to locate, analyse, organise and communicate information (e.g. internet, on-line databases, search engines, library catalogues, spreadsheets, specialist programs, word processing and presentation software).
 

20% Mid-term exam. Online, multiple choice questions on taught material. 

80% Exam, Open book exam. 

Piazza, drop-in sessions, virtual office hours.

 

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.