Makro-Pic Open Economy Macroeconomics

Thursday 10:15 - 12:00, Room ZHG 004
Exercises: Wednesday 14:00-16:00, Room ZHG 101
First lecture: October, 26. No lecture October, 19th !
Textbook: International Macroeconomics by Schmidt-Grohe, Uribe, and Woodford (SUW, Version April 2016)
Additionally, a few parts from Obstfeld and Rogoff (1996), Foundations of International Macroeconomics, MIT Press; and selected original journal articles.

Course Plan

1. The Balance of Payments

Reference: SUW Chapter 1 and 2

2. A Theory of Current Account Determination

Reference: SUW Chapter 3 and 5

3. Current Account Determination in a Production Economy

Reference: SUW Chapter 4

4. External Adjustments in Small and Large Economies

References: SUW Chapter 6
Aguiar, M., and Gopinath, G. (2007). Emerging Market Business Cycles: The Cycle Is the Trend. Journal of Political Economy, 115(1), 69-102.

5. Twin Deficits: Fiscal and Current Account Imbalances

Reference: SUW Chapter 7

6. International Capital Market Integration

Reference: SUW Chapter 8

7. Financial Development and Global Imbalances

Reference: Mendoza, E. G., Quadrini, V., and Rios-Rull, J. V. (2009). Financial Integration, Financial Development, and Global Imbalances. Journal of Political Economy, 117(3), 371-416.

8. Capital Account Liberalization and Growth -- Why doesn't capital flow from rich to poor countries?

References: Lucas, R. E. (1990). Why doesn't capital flow from rich to poor countries?. American Economic Review, 80(2), 92-96.
Caselli, F., and Feyrer, J. (2007). The Marginal Product of Capital. Quarterly Journal of Economics, 122(2), 535-568.
Rodrik, D., and Subramanian, A. (2009). Why did financial globalization disappoint?. IMF staff papers, 56(1), 112-138.

9. Determinants of the Real Exchange Rate

Reference: SUW Chapter 9

10. Aggregate Demand Shocks and Real Exchange Rates

Reference: SUW Chapter 10

11. Exchange Rate Policy and Unemployment

Reference: SUW Chapter 11

12. The European Balance of Payments Crisis

References: H.-W. Sinn et al., 2012, The European Balance of Payments Problem. EEAG Report 2012, Chapter 2.
(with updates from H.-W. Sinn, 2015, The Euro Trap).

13. Sovereign Debt: Conventional Theories

References: SUW, Chapter 12
Maurice Obstfeld and Kenneth Rogoff, 1996, Foundations of International Macroeconomics, Chapter 6.2.

14. Sovereign Debt: New Developments

Reference: Panizza, U., Sturzenegger, F., and Zettelmeyer, J., 2009, The economics and law of sovereign debt and default; Journal of Economic Literature 47-47.
Gennaioli, N., Martin, A., and Rossi, S., 2014, Sovereign default, domestic banks, and financial institutions.
Tirole, J., 2012, Country solidarity, private sector involvement and the contagion of sovereign crisis.

15. Monetary Policy and Exchange Rate Determination

Reference: SUW Chapter 13

Material from 2016:

Excursion: Trump and the Current Account


Guest lecture (Cheng Wang, Fudan University): Dynamics of Sovereign Default