34080 - International Economics (Advanced Course)

Learning outcomes

The aim of the class is to endow students with the ability to carry out independent analysis of issues in open macroeconomics with a special emphasis on the pros and cons of international capital mobility, on foreign debt, global imbalances and the political economy of financial globalization. Each student is expected to interpret and understand macro integration processes and their implications for global stability, welfare and global peace.

Course contents

The program is made up of two sections.

The first section (20 hours, 10 meetings) is an introduction to Open Macroeconomics for students who come from other Universities and Faculties.

Those who have attended and passed Economia Internazionale (SID TRI) are not requested to attend this first part. 

The second part is based 40 hours classes on advanced Open Macroeconomics, along the following issues:

 

 

1.     the current account (CA) as an intertemporal choice

2.     the benefits of intertemporal consumption

3.1.      benefits, costs and risks of financial openess when there are large international cross flows of assets

3.2.     optimal investment in a dynamic financially open economy

 

4.     cost and benefits of international capital mobility

5.     external debt sustainability

6.    currency unions

7. 1  foreign exchange reserves

7. 2    the role of the IMF

8.     Lucas paradox on international financial flows.

9.     Financial openness: conclusion and rejoinder on costs and benefits

10.     Back to the present: external Debt, public Debt and the roots of the 2008 crisis and beyond

 

Readings/Bibliography

(BI) Banca d'Italia (1995) Tematiche istituzionali: Manuale della Bilancia dei pagamenti in Italia

 (BCO) Basevi, G, G. Calzolari, G. Ottaviano (2002) Economia Politica degli scambi internazionali, Carrocci editore, Roma

  (IMF) International Monetary Fund 1993 Balance of payments manual.  5th. ed. -Washington

 (FT) Feenstra R. and Taylor A. (2008) International Macroeconomics Worth Publisher

(LR) Lucas, R.  (1990) Why doesn't capital flow from rich to poor countries?  American Economic Review v.80 p.92 – 103

 (ME) Melvin, M. (2004) International Money and Finance , Addison-Wesley, New York.

 (OR) Obstfeld M. and Rogoff K. (1996) Foundations of International macroeconomics. MIT Press.

 (OR2000) Obstfeld M. and Rogoff K. (2000) The six major puzzles in international macroeconomics: is there a common cause? NBER Working papers n. 7777 . www.nber.org

 (S)  Schlitzer, G. (2000) Il Fondo Monetario Internazionale. Il Mulino, Bologna.

Frankel J.A. and Rose A. K. (1996) The endogeneity of the optimum currency area criteria. NBER Working Paper # 5700

Gros, D. (2004) Profiting from the euro? Seigniorage Gains from Euro Area Accession. Journal of Common Market Studies, 42, (4) 795-813.

Feldstein, M.S. and  Horioka C. Y.(1980) Domestic saving and international capital flows. Economic Journal 90, 314-29.

 Blanchard, O. and Giavazzi F. (2002), “Current Account Deficits in the Euro Area: The End of the Feldstein-Horioka Puzzle,” Brookings Papers on Economic Activity 2, pp.148-186.

The Economist (The retreat from everywhere: Led by European banks, the world's lenders are pulling back to their home markets) Apr 21st 2012 

Obstfeld M. (2012)  Does the current account still matter? NBER working paper # 17877,

Rossini G. (2010) Lo strabismo di Maastricht http://www.lavoce.info/articoli/pagina1001698.html

 

  For all lectures further references and notes are on the Web.

Teaching methods

Most lectures are based on theoretical analyses of international macroeconomics and political economy.

The most common used tools are mathematical models and graphical presentations.

Empirical studies and statistical measurement of some key variable will be provided.

P.S. The student is required to possess a reasonable background in Macroeconomics, Microeconomics, Statistics and International Economics (at the laurea triennale tier). Applied Econometrics is a good complement, in particular for those willing to write a thesis on topics of this course.

Assessment methods

For those attending lectures: written exam (only once) possibly with viva voice additional discussion. Written exam is based on multiple choice questions, open questions and a few applied problems.

For those not attending course the exam is only viva voice at assigned dates.

P.S. Students are strongly advised to attend classes. During lectures bonuses will be granted for replies to questions raised by the teacher and in case of home assignments.

Teaching tools

Blackboard and PC projector for files available – access restricted to enrolled students - on the web without copyright limitations, specific readings provide during classes.

Office hours

See the website of Gianpaolo Rossini