25751 - International Economics

Academic Year 2021/2022

  • Teaching Mode: Traditional lectures
  • Campus: Bologna
  • Corso: First cycle degree programme (L) in Business and Economics (cod. 8965)

Learning outcomes

At the end of the course students are able to analyze several issues related to macroeconomic policy in open economies and to the evolution of foreign exchange markets. Specifically, students are exsposed to the determination and dynamics of exchange rates, on the choice between flexible and fixed exchange rates, with special attention to the European Monetary Union, on the international role of the euro and its relationship with the dollar and, finally, on speculative attacks on currencies and the design of a new international financial architecture.

Course contents

The first part of the course focuses on international trade theory and policy. It addresses some of the classic questions of international trade theory such as: who trades what with whom? What are the effects of trade on welfare and the income distribution? How micro-aspects enter the picture of international trade? The course presents the answers of classical and new trade theory to these questions. The first part ends with an overview of recent theoretical and empirical research on the role of heterogeneous firms in international trade.

The second half of the course covers selected topics in the fields of trade policy and international macroeconomic. Some questions which will be tackled during this second part of the course will be: What are the effects of barriers to trade and economic integration? What about trade policies in developing countries? How are nominal exchange rates determined? What does it mean for a currency to be overvalued or undervalued? Why do countries run large current account surpluses or deficits? Are such external imbalances sustainable? Why do some fixed exchange rate regimes fail and end in a currency crisis? What are the benefits and costs of a common currency?

International Trade
- The Ricardian model
- The specific factors model
- The Heckscher-Ohlin model
- The standard trade model
- External economies of scale
- Internal economies of scale, FDI and multinational enterprises

Topics in trade policy
- Tariffs and quotas
- The political economy of trade policy
- Trade policy in developing countries
- Controversies in trade policy

Topics in open macroeconomics and international macroeconomic policies
- National income accounting and the balance of payments
- Exchange rates and the foreign exchange market
- Optimum currency areas and the European experience
- Financial globalization: opportunity and crisis
- Developing countries: Growth, crisis, and reform


Krugman, P., M. Obstfeld and Marc Melitz: "International Economics: Theory and Policy", 11th edition. Pearson Eds.

Additional material distributed in class

Teaching methods

Lectures and exercises with intstructor.

Production of essays based on relevant economic facts.

Classworks based on presentations given by small groups of students.

Assessment methods

Written exam, with midterm during the course.

Essays and Team Works will contribute to the final grade, which will parametrized as:

  • <18 insufficient
  • 18-23 sufficient
  • 24-27 average/good
  • 28-30 very good
  • 30 cum laude excellent/outstanding

Teaching tools

Slides based on (i) the book and (ii) relevant articles made available on instructor's website.

Office hours

See the website of Giovanni Prarolo


No poverty Decent work and economic growth

This teaching activity contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.