25752 - International Finance

Learning outcomes

The aim of the class is to let students be able to carry out independent analyses of several topics in open macroeconomics. A specific emphasis is on pros and cons of international capital mobility, on foreign debt, on global imbalances and on the political economy of financial globalization. Each student is expected to interpret and understand, with a critical touch, macro integration processes and their implications for global stability, welfare and global peaceful coexistence.

Course contents

We begin by presenting the two workhorse models of infinitely lived households and overlapping generations in a closed economy setting. Then we study how the presence of capital mobility affects capital accumulation, welfare and inequality. Political economy aspects of sovereign debt are covered, and we conclude with an analysis of the Euro crisis with particular emphasis to its open economy aspects.

Readings/Bibliography

Niepelt, D., ``Macroeconomic Analysis", 2019, MIT Press

Obstfeld, M. and K. Rogoff, ``Foundations of International Macroeconomics'', 1998, MIT Press, first edition

Blanchard, O. and S. Fisher, ``Lectures on Macroeconomics", 1989, MIT Press

Romer, D., ``Advanced Macroeconomics'', 2012, McGraw Hill, fourth edition

Gonzalez-Eiras, M., (2017), “Why Might the Old Want to Honor Sovereign Debt?”, working paper

Reinhart C., and K. Rogoff, (2009), “This Time is Different”, chapters 1-2

Calvo G., A. Izquierdo, and E. Talvi, (2006) “Phoenix Miracles”, American Economic Review, 96(2), 405-410

Caballero R., K. Cowan and J. Kearns, (2005) “Fear of Sudden Stops: Lessons from Australia and Chile”, The Journal of Policy Reform, 8(4), 313-354

Talvi E., and C. Vegh, (2005), “Tax base variability and procyclical fiscal policy in developing countries” Journal of Development Economics, 56(1), 156-190

Brunnermeier, M. and R. Reis, (2019), “A Crash Course on the Euro Crisis”, NBER working paper No. 26229

Teaching methods

Most lectures are based on theoretical analyses of international macroeconomics and political economy of open macroeconomics. The most used tools are mathematical models and graphical presentations. Empirical studies and statistical measurements of some key variable will be provided. Some classes will be used to solve problems sets that will be given in advance.

Students should possess a reasonable background in Macroeconomics, Microeconomics, Statistics and International Economics (at the laurea triennale tier). However, all students are welcome regardless of their background. If required, they may attend the course while receiving specific help from the teacher during office hours.

Assessment methods

Your grade will be based on a written, closed-book exam (taking place only once a year at the end the course), which consists of a combination of true/false questions and exercises that counts for 70% of the grade. The remaining 30% of the grade corresponds to a written assignment that can be done alone or in pairs of students, and must be handed midway through the course.

The particularly good performance, corresponding to the top mark, is characterized by a complete fulfillment of the course’s learning objectives.

Teaching tools

Lectures and problem solving in classes. Mathematical models and graphical presentations. Empirical studies and statistical analysis.

Office hours

See the website of Martin Gonzalez Eiras