ECON
313: International Macroeconomics
Spring
Semester 2008
Joseph
P. Joyce
Room 321 PNE
Department of Economics
Wellesley College
Tel: 781-283-2160
E-mail: jjoyce@wellesley.edu
Goals: This
course deals with aggregate economic activity in the open economy.
We focus on the composition of the balance of payments; the open-economy impact of macroeconomic policies; the effects of international capital flows; the choice of exchange rate regine; internationla fincancial crises; and the role of the IMF.
One of the goals of this course is to learn how to read research papers. We will read recent published and working papers and discuss how their authors present their evidence.
Perquisites: The prerequisites for the course are ECON 202 and
203. It will not be possible to take either of these courses
concurrently with this course, as the theoretical models and
empirical analyses we will discuss require familiarity with the
material taught in ECON 202 and 203.
Readings: The main text for the course is:
Caves, Frankel
and Jones, World
Trade and Payments (10th ed)
The other
readings are posted on the course conference, or are available
at Clapp Library.
Requirements: The course grade will be determined
by the results of two exams (25% each), two papers (20% each),
a joint paper
presentation (10%). Students are
expected to adhere to the Wellesley College Honor Code in fulfilling
their assignments.
Class
Conference and Blogs: There is a FirstClass conference
that we will use to post
announcements, answer questions, etc. In addition,
students should keep up with Econbrowser, the macroeconomics
blog of James Hamilton and Menzie Chin.
Office
Hours:
Wednesdays from 10 – 11 a.m. and Thursdays
from 2 – 3 p.m.
READINGS
Articles are posted at our class conference.
I. Concepts and Relationships
Jan. 29:
Exchange Rate Markets
Feb. 1: Fixed Exchange Rates
Feb. 5: Balance of Payments
Caves, Frankel and Jones, Chs. 16: p. 291-293, 15
Feb. 8: Paper Presentations
Freund, 2005, "Current Account Adjustment in Industrial Countries," Journal
of International Money and Finance, 24 (8): 1278-1298
Mendoza, 2004, "International Reserve-Holdings in the Developing World: Self Insurance in a Crisis-Prone Era?" Emerging Markets Review 5 (1): 61-82
II. Macroeconomic Policies
Feb.
12: Income-Exp Model
Feb. 15: IS/LM/BP
Feb. 19: Monetary and Fiscal Policies
Feb. 22: External Shocks
Caves, Frankel
and Jones, Chs. 17.1-3, 17.5, Appendix; 22.1-3; 23.1-2
Feb. 26: Paper
Presentations
Salvatore, 2006, "Twin Deficits in the G-7 Countries and Global Sturctural Imbalances," Journal of Policy Modeling 28 (6): 701-712
Calderon, Chong and Zanforlin, 2007, "Current Account Deficits in Africa: Stylized Facts and Basic Determinants," Economic Development and Cultural Change 56 (1): 191-221
Feb. 29: Policy Models
Caves, Frankel and Jones, Ch. 18: p. 333-336, Appendix B
III. International Capital
March 4:
Capital Flows and Controls
March 7: Interest Rate Parity
Caves, Frankel and Jones, Ch. 21.3-4, Ch. 24.1, 24.7
Hallwood and MacDonald, International Money and Finance (3rd
ed), Ch. 19.4: p. 398-401
March 7: Paper #1 Due
March 11: Paper
Presentations
Alfaro, Kalemeli-Ozcan and Volosovych, "Why Doesn't Capital Flow from Rich to Poor Countries? An Empirical Investigation," NBER Working Paper #11901, 12/05
Daude and Fratzcher, 2008, "The Pecking Order of Cross-Border Investment," Journal of International Economics 74 (1): 94-119
Mid-Term
Exam: March 14
IV. Exchange Rates Regimes
March 18: PPP
March 21: No Class
April 1: Fixed vs Flexible Rates
April 4: Montary Unions
Caves, Frankel and Jones, Ch. 19.2-19.3, Ch. 26.5
Montiel, Macroeconomics in Emerging Markets, Ch.
17: Section VI
Spring Break: March 25, 28
April 8: Paper
Presentations
Husain, Aasim
M., Ashoka Mody and Kenneth S. Rogoff, “Exchange
Rate Regime Durability and Performance in Developing versus Advanced
Economies, Journal of Monetary Economics, vol. 52 (1): 35-64
Rose, 2007, "A Stable International Monetary System Emerges: Inflation Targeting is Bretton Woods, Reversed," Journal of International Economics 26 (5): 663-681
V. Crisis and Response
April 11, 15:
Currency Crises
Caves, Frankel and Jones, Ch. 24.3
Hallwood and MacDonald, International Money and Finance (3rd ed),
Ch. 14.1-14.4, 14.8
April 18: Financial Crises
Caves, Frankel and Jones, Ch. 24.2, 24.4, 24.6
Mishkin, “Global Financial Instability,” Journal of
Economic Perspectives, vol. 13 no. 4, Fall 1999
Frankel, “Coping with Crises in Emerging Markets: Adjustment
versus Financing” in Das (ed.), An International Finance
Reader, 2003
April 22:
Monday Schedule
April 25:
Paper Presentations
Leblang, 2002, "The Political Economy of Speculative Attacks in the Developing World," International Studies Quarterly 46 (1): 69-91
Hutchison and Noy, 2006, "Sudden Stops and the Mexican Wave: Currency Crises, Capital Flow Reversals and Output Loss in Emerging Markets," Journal of Development Economics 79 (1): 225-248
VI. Role
of IMF
April 29, May 2: Organization and Policies
Caves, Frankel and Jones, Ch. 24.5, 24.8
W. Max Corden, “The World Financial Crisis: Are the IMF
Prescriptions Right?” in Horowitz and Heo (eds.), The
Political Economy of International Financial Crisis, 2001
April
25: Paper #2 Due
May 6: Paper Presentations
Kamin, 2004, “Identifying the Role of Moral Hazard in International
Financial Markets,” International Finance 7 (1): 25-29, 2004
Eichengreen, Gupta and Mody, 2006, "Sudden Stops and IMF-Supported Programs,"
IMF Working Paper no. 06/101
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