International Economics (ECON ) (48 hours, 3 credits)

Transcription

1 1 Universidad Americana College of University Studies in English, CUSE Course Syllabus International Economics (ECON ) (48 hours, 3 credits) SEMESTER: Aug - Dec 2015 Days: Tuesday Thursday 17:45-19:15 hrs Classroom: M-203 Professor: Carlos Herrera carlos.herrera@gdevelopmentg.com or c.herrera@maw.ru.nl Phone: Homepage: COURSE DESCRIPTION: Students will develop the ability to better use analytic tools trough theory implementation; references will be made on experience among industrial and developing economies. This theoretical course studies the political economy of international trade in depth. Macroeconomic policy and performance of open economies under alternatives exchange rate regimes are peruse. Basic topics studied include arbitrage relationships; static and Inter-temporal current account determination; the effectiveness of fiscal and monetary policies under fixed and flexible exchange rate regimes; models of exchange rate dynamics; and, issues of exchange rate regime choice. Additional topics may include analyses of stabilization and growth and balance of payments crises. International Economics is closely related to all economics, political economy and international development classes. Prerequisites: Microeconomics, Macroeconomics. REQUIRED TEXTBOOK AND MATERIALS: International Economics. Robert Christopher Feenstra, Alan M. Taylor. Second Edition. COURSE OBJECTIVES: Upon completion of this course you should be able to identify, develop, and discuss the objectives presented below: Objective: Identify methods to analyze theory implementation in international economic theories that relate to trade.

2 2 Learning Outcomes a. To understand the meaning of international economics and the current world trade situation. b. To identify various theoretical models in labor productivity and comparative advantage. c. To understand the theoretical relationships between resources, comparative advantage and income distribution. d. To identify the standard trade model. e. To understand the theoretical relationships between economies of scale, imperfect competition & international trade. f. To understand the underlying theories related to factor movements. 2. Objective: To identify key elements in practice in international trade policies. Learning Outcomes a. To identify the instruments of trade policy. b. To examine the political economy especially as it relates to the issue of free trade. c. To compare and contrast trade policies in developing and developed countries. d. To identify some of the trade controversies related to low wages, globalization and the environment. 3. Objective: To identify macroeconomic policies and performance of open economies under alternative exchange rate regimes. Learning Outcomes a. To understand the meaning of national income accounting and the balance of payments. b. To identify the foreign exchange market through the assets approach. c. To understand the money, interest rates and exchange rates and their interplay. d. To compare and contrast price levels, exchange rates, and output in the long and short run. e. To identify effects of fixed exchange rates and foreign exchange intervention. 4. Objective: To be able to understand past and future trends in international macroeconomic policy. Learning Outcomes a. To identify factors in the development of the international monetary system from b. To identify macroeconomic policy related to floating exchange rates. c. To compare and contrast the European experience and the global capital markets. d. To compare and contrast growth, crisis, and reforms in developing countries and areas.

3 5. Objective: To summarize the interrelationships of international economic theories and practices. Learning Outcomes a. Compare and contrast absolute advantage and comparative advantage. b. To understand current account determination. c. To identify the role of fiscal and monetary policies under fixed and flexible exchange regimes. d. To recapitulate the dynamics of growth factors. UAM s Transversal Competencies Competencies Objectives Learning Outcomes 3 Competency related to learning Competency related to interpersonal relations Competency related to personal autonomy and development Competency related to using values 1. Use information and communication technology to permanently learn, abstract, analyze, synthesize, identify, propose research, resolve problems, and put knowledge into practice. 2. Using English, motivate students to work in teams, establish common goals, and develop skills in international context. 3. To commit to quality, adaptation to new situations and decisionmaking as well as innovation and work leading to personal autonomy. 4. To foster responsibility, ethical values and demonstrate social responsibility and citizenship. 1.1 To use the print and electronic media as well as personal interaction in autonomous learning, communication, and permanent up-dating in the profession. 1.2 To identify, formulate, and resolve real or simulated problems by systematically using established methods that have technical validity. 2.1 To optimize the use of English. 2.2 Identify group objectives and orient toward these. 2.3 Apply the best practices of the profession according to the latest techniques. 3.1 To satisfactorily reach academic standards and parameters that are personal and professional. 3.2 To effectively adapt to new situations and be able to propose innovative solutions. 3.3 To plan execute, and evaluate autonomous and formative tasks and professional roles that encourage autonomy. 4.1 To always perform with academic integrity according to the highest standards and democratic values. 4.2 Realize or participate in projects based on principles of democracy, inclusion, gender, human development, citizenship, sustainable development, transparency, and care of the environment.

4 4 UAM-CUSE Transversal Competencies Master the mind. Master communication. Master information & technology. Master a holistic view of the world. Be an ethical leader: create a legacy CLASS METHODOLOGY AND ACTIVITIES: In class Composed of a mix: Approximate 60 minute lecturing on specific subject matter. Previous reading assignment will be A MUST throughout the whole course in order to enrich class time learning process. Approximately 30 minute guided class discussion. Students are required to keep themselves informed of current affairs, political and economical events worldwide. Individual work/assignments will be a rutinary part of the course. At times, small group discussion will be applied, accompanied with specific work assignments (case studies, role playing, specific tasks, etc.) to be completed by team in class or as homework. Visuals will be part of the class methodology. Guest speakers, experts in subject matter will be invited. Outside class activities Students might be requested to attend specific lectures and/or events related to subject matters. Grade Exams % Critical Thinking papers 30% Assignments 10% Final Exam... 10% Exams: There will be four section assessments or presentations based on the section divisions in the textbook. There may be other assessments as needed.

5 5 Critical thinking papers: Two five page (body) critical thinking paper discussing a particular International Economics topic is required. APA format with citations must be used. The paper must also include a title page, an introduction, a summary or conclusion, and a bibliography section, all conforming to APA guidelines. (one for Midtem, one final paper) Assignments: students will be required to complete a series of assignments and coursework around case studies, news stories and quizzes, group projects and similar. Final Exam: will be based on the subtopics presented in the textbook for each chapter. Active class participation is expected: Readings and exercises will be assigned for discussion in class. Each student or group of students will lead the discussion of one or more topics during the semester. Teamwork will be encouraged. High points of the text material will be discussed in class, but each student is expected to read the assigned material before class and be responsible for it on subsequent examination (s). A professional behavior is expected in class. Internet research and current news related to the assigned reading will be requested and discussed in class. Ethical behavior: Any misconduct on any task will result in a zero grade for all parties involved. Plagiarism or cheating will be penalized.

6 6 COURSE OUTLINE: I. Unit I International Trade Theory (Four weeks) A. Introduction and World Trade Overview 1. What is International Economics? 2. Trade and Money 3. Changing Patterns of World Trade 4. Do the old rules apply? B. Labor Productivity & Comparative Advantage 1. Concept of comparative advantage a) One factor economy b) Misconceptions c) Many goods 2. Transport costs & non traded goods 3. Empirical evidence C. Resources, Comparative Advantage & Income Distribution 1. Two factor economy a) International trade 2. Political economy of trade 3. Heckscher Olin Model 4. Factor prices, goods prices, & input choices D. Trade model, Scale, Imperfect Competition 1. Standard trade model 2. International income transfers 3. Tariffs & export subsidies 4. Representing international equilibrium 5. Economies of scale & trade and market structure 6. Imperfect competition 7. Monopolistic competition & trade 8. Theory of external economies 9. Geography & trade E. International Factor Movements 1. International labor mobility 2. International borrowing & lending 3. Direct foreign investment and multinational firms

7 7 II. Unit II International Trade Policy (Three weeks) A. Instruments of Trade Policy 1. Tariffs a) Analysis b) Costs & benefits 2. Other instruments of trade policy 3. Effects of trade policy B. Political Economy of trade policy 1. The free trade debate 2. Income distribution and trade policy 3. International negotiations and trade policy C. Trade Policy in Developing Countries 1. Import substituting industrialization 2. Favoring marketing: import substitution 3. Trade liberalization since Export oriented industrialization D. Controversies in Trade Policy 1. Sophisticated arguments for activist trade policy 2. Globalized and low wage labor 3. Globalization and the environment III. Unit Three Exchange Rates and Open Economy Macroeconomics (Four weeks, Chapters) A. National Income accounting and Balance of Payments 1. National income accounts 2. National income accounting for an open economy 3. Balance of payments accounts B. Exchange Rates & Foreign Exchange Market 1. Exchange rates and international transactions 2. Foreign exchange markets 3. Demand for foreign currency assets 4. Equilibrium in foreign exchange markets 5. Interest rates, expectations, & equilibrium

8 8 C. Money, Interest Rates, & Exchange Rates 1. Money defined 2. Demand for money, individual & aggregate 3. Equilibrium interest rate: money supply & demand 4. Money supply & exchange rates: short run 5. Money, price level, exchange rate: long run 6. Inflation & exchange rate dynamics D. Price Levels & Exchange Rates: Long Run 1. Law of one price 2. Purchasing power parity 3. PPP model & problems with it 4. Beyond the PPP 5. International interest rates differences and real exchange rate 6. Real interest parity E. Output & Exchange Rate in Short Run 1. Aggregate demand 2. Output determination 3. Short run market equilibrium 4. Monetary & fiscal policy a) Temporary shifts b) Inflation bias & other policy problems c) Permanent shifts 5. Macroeconomic policies and current accounts F. Fixed Exchange Rates & Exchange Intervention 1. Fixed exchange rates 2. Central bank intervention & money supply a) Central bank fixing b) Stabilization policies with a fixed exchange rate 3. Balance of payments crises & capital flight 4. Managed floating 5. Reserve currencies in world monetary system 6. Gold standard

9 9 IV. Unit IV International Macroeconomic Policy (Three weeks) A. The International Monetary System Interwar years Bretton Woods system & IMF 3. US balance problem 4. Worldwide inflation & transition to floating rates B. Macroeconomic Policy & Coordination under floating exchange rates 1. Case for and against floating rates 2. Macro interdependence under floating rates 3. Lessons since Fixed rates: a real option? 5. Directions for reform C. Optimum Currency Areas & European Experience 1. Evolution of Euro 2. Economic policy in euro zone 3. Optimum currency areas 4. Future of EMU D. The Global Capital Market 1. International Capital market & gains from trade 2. International banking and capital markets 3. Regulating international banking E. Developing countries: Growth, Crisis, & Reform 1. Income, wealth & growth in world economy 2. Structural features of developing countries 3. Developing country borrowing & debt 4. East Asia 5. Lessons learned 6. Reforming the financial architect 7. Capital flows, distribution of income: Is geography destiny?

10 10 Important dates Tuesday, September 15. No Class Make up class Friday September 18, 12:00-15:00. Room. TBA CLASS CODE 1) Dates in the syllabus are subject to change. 2) Late work: Will NOT be accepted regardless of excuse! Students will receive a ZERO for all missing work. 3) ALL make up exams: Grade lowered 10% 4) More than 5 absences (excused/unexcused): Grade lowered 10% 5) More than 3 late arrivals = 1 Absence. Please enter through the back door. 6) Plagiarism/Cheating NOT! Students who are caught cheating on any work/test will be failed on that work with a ZERO. A student, who is caught cheating a second time, will be failed for the course with a notification to the program office. 7) More than 7 absences (excused/unexcused): Failed 8) All work turned in via must receive an answer from the professor as confirmation of effective delivery. If the student does not get a response, the professor did not receive it. All documents must open successfully; if a document is sent but does not open, it was not delivered. Students are responsible for e-work delivery, NOT THE PROFESSOR. Important Note Respect and courtesy are signs of a leader. Respect your professor, your fellow students and all of those you interact with in this class. Prof. Carlos Herrera Ph.D University of Nijmegen, The Netherlands MA. University of Manchester, UK B.Sc. University of Mobile, USA The World Bank Group, Nicaragua & USA, Country Officer. The World Bank Group, Washington DC, Int. Con. Economic Policy Sector Global Development Gateway, Manchester, UK, Director. MDB Capital Group, CAL, USA. Senior Investment Banking Analyst Stock Exchange Market, Nic, Economic and Financial Advisor, President s office Government of Nicaragua, Director of Foreign Affairs, Investment Advisor. Embassy of Japan, Economic Analyst & Project Supervisor