L13609 International Money and Macroeconomy

Pre-requisite: L13509 Monetary Economics I is strongly recommended Credits: 15 Lecturer: Dr Yoshi Morozumi

Module description & content

This module covers the theory of international money and macroeconomics. The course content is given as follows. 1: Introduction 1-1: Uncovered interest rate parity Blanchard, O (2008, 5th ed.) Macroeconomics, Prentice Hall/Pearson, Chapter 18 Copeland, L (2008, 5th ed.) Exchange Rates and International Finance, FT Prentice Hall, Chapter 3 Hallwood, C.P. and MacDonald, R. (2000, 3rd ed.) International Money and Finance, Blackwell Publishers, Chapter 3 1-2: Purchasing power parity Copeland, Chapter 2 Haskel J. and Wolf H. (2001) The Law of One Price - A Case Study, Scandinavian Journal of Economics 103(4) 545-58 Hallwood and MacDonald, Chapter 7 Krugman P.R. and Obstfeld M. (2003, 6th ed.) International Economics: Theory and Policy, Addison-Wesley, Chapter 15 2: Exchange rate determination and effectiveness of macroeconomic policies 2-1: The monetary model Copeland, Chapters 5 and 13 Hallwood and MacDonald, Chapter 9 Obstfeld, M. and Rogoff, K. (1996) Foundations of International Macroeconomics, MIT Press, Cambridge MA, Chapter 8 2-2: The Mundell-Fleming model Blanchard, Chapter 20 Copeland, Chapter 6 Hallwood and MacDonald, Chapter 5

2-3: The Dornbusch Model Copeland, Chapter 7 Dornbusch R. (1976) Expectations and Exchange Rate Dynamics, Journal of Political Economy 84(6), 1161-1176 Hallwood and MacDonald, Chapter 9 Obstfeld and Rogoff, Chapter 9 3: Macroeconomic interdependence 3-1: Mundells Two-Country Model Hallwood and MacDonald, Chapter 6 Krugman and Obstfeld, Chapter 19 3-2: International Policy Coordination Hallwood and MacDonald, Chapter 6 Krugman and Obstfeld, Chapter 19 Walsh, C (2003, 2nd ed.) Monetary theory and policy MIT press, Chapter 6 4: Choice of exchange rate regime: fix or float? Poole, W (1970) Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model, Quarterly Journal of Economics 85 Artis, M.J. and Currie, D.A. (1981) Monetary Targets and the Exchange Rate: A Case for Conditional Targets In W.Eltis and P.Sinclair, The Money Suppply and the Exchange Rate, Oxford University Press 5: Currency crises and speculative attacks 5-1: The first generation model Copeland, Chapter 18 Hallwood and MacDonald, Chapter 14 Obstfeld and Rogoff, Chapter 8 5-2: The second generation model Copeland, Chapter 18 Obstfeld, M (1996) Models of currency crises with self-fulfilling features, European Economic Review 40 (April): 1037-48 Obstfeld and Rogoff, Chapter 9 6: Introduction to `micro-founded macroeconomics: intertemporal trade and the current account balance

Obstfeld and Rogoff, Chapter 1 Obstfeld and Rogoff (1995) Exchange rate dynamics redux, Journal of Political Economy 103 (June): 624-660 Back to top ^

Aims and objectives

The aim of this module is to introduce the theory of international money and macroeconomics. On completing this module, the learning outcomes are such that students will be able to: Knowledge and Understanding:

A1 Demonstrate a broad knowledge of core areas of economics. A2 Apply core economic theory and economic reasoning to applied topics. A3 Show understanding of analytical methods, both theory- and model-based. A4 Demonstrate understanding of verbal, graphical, mathematical and econometric representation of economic ideas and analysis, including the relationship between them. A6 Discuss and analyse government policy.

Intellectual Skills:

B2 Work with abstract concepts and in a context of generality. B3 Reason logically and work analytically. B5 Understand the context in which a problem is to be addressed.

Professional / Practical Skills:

C2 Select and apply appropriate techniques to solve problems. C3 Justify conclusions using economic arguments with appropriate rigour.

Transferable Skills:

D1 Apply mathematical, statistical and graphical techniques in an appropriate manner. D2 Communicate effectively and clearly in written and oral formats. D3 Analyse and solve complex problems accurately. D5 Undertake independent study of a problem or subject.

Emphasised learning outcomes from the study of this module are: A1, A4, C3, D1 and D5.

Lectures and tutorials

Each tutorial group will meet three times a term and the timing of these will be announced in lectures. Please sign up on Nexus for the tutorial sessions.

Module Assessment
Exam (100% - 2.5 hours) Previous Examination Papers and Feedback for all modules can be viewed online in the Portal but are restricted to registered students only. A password may be required to access this material.

Module Texts
Main textbooks Copeland, L (2008, 5th ed.) Exchange Rates and International Finance, FT Prentice Hall Hallwood, C.P. and MacDonald, R. (2000, 3rd ed.) International Money and Finance, Blackwell Publishers Obstfeld, M. and Rogoff, K. (1996) Foundations of International Macroeconomics, MIT Press, Cambridge MA

Further information
If you have any questions regarding this module please feel free to contact the lecturer. At the end of this semester, we would welcome your views on the organisation and content of this module.