ECN320 International Macroeconomics

Notes:

Course description and lecture plan (Aug block 2025):

Group

Course description  [kursbeskrivelse] Lecture plan and schedule [kursplan]

Session/ date	Description of lecture topic	Lecture outline	Reading assignment	Handouts, slides and exercises (slides subject to last-minute changes)
Module 1. Linking the Domestic Macroeconomy to International Transactions
1 12.08	09.15-12.00 Course overview, objectives and requirements; intro; Section 1.1-1.7: Macro income accounting analysis; BOT; BOP; international reserves	Outline 1	Krugman, Obsfelt & Melitz (KOM) KOM, ch 13 Supplementary reading packets (SRP): SRP1	Slides: session 1 Fun listening: Keynes v Heyek: Investment vs mal-investment https://www.youtube.com/watch?v=d0nERTFo-Sk
2 13.08	09.15-12.00 Section 2: Exchange rates and purchasing power parity; foreign currency exchange; Section 3: Modeling of currency mkts: Eqlbm and changes in eqlbm; exchange rates as trade policy tool	Outline 2	KOM, ch 14, 16; (ignore interest rate / asset returns) Appleyard, Field & Cobb (AFC) RR: AFC, ch 20 (pp. 465-484, ignore interest rates / assets) SRP2 RR: Houck, ch 15	Slides: session 2
3 14.08	09.15-11.00 Optional session for those wanting a review of trade policy analysis; groups discuss exercise		Related reading (RR): RR: Houck, ch 15	Free trade and import restrictions
4 15.08	09.15-11.00 Download exercise 1 for in-class group work. (prepare to present results and discuss insights)	Outline 4	RR: AFC, ch 23 RR: Houck, ch 15 SRP4	Exercise 1: Modeling trade flows from exchange rate changes Exercise 1 answer sheet Slides: session 4
	11.15-12.00 Section 3.6: devaluation and depreciation, Marshall-Lerner condition, J-curve effect
Module 2. Money, Goods and Asset Market Equilibrium
5 18.08	09.15-12.00 Section 4: Money mkt and i-rate determination; Section 5.1-5.2: Interest rates, capital flows and exchange rates (i-rate parity and investor behavior); covered i-rate arbitrage	Outline 5	KOM, ch 14-16 (focus on interest rate/asset returns) SRP5	Slides: session 5
6 19.08	09.15-12.00 Section 5.3-5.4: Capital controls; modeling asset demand, i-E relationship; dynamic adjustment, Fischer effect, overshooting hypothesis; Section 6: General eqlbm analysis: Mundell-Fleming model; Section 6.1: Goods mkt eqlbm (IS, DD and AD=AS); Section 6.2: BOP eqlbm, and foreign exchange eqlbm; capital mkt flexibility; Section 6.3: Asset and money mkt eqlbm (LM and AA curves); Section 7: Fiscal and monetary policy	Outline 6	KOM, ch 16-18 RR: AFC, ch-25, ch-26; ch-27 SRP6	Slides: session 6 Interest parity and dynamic adjustment
20.08	Independent study/reading time; groups can meet to prepare/discuss exercise 2
7 21.08	09.15-12.00 Download exercise 2 for in-class group work. (prepare to present results and discuss insights); FP and MP effectiveness under fixed and flexible exchange rate regimes	Outline 7	KOM, ch 18 RR: AFC, ch-25, ch-26, ch-27 SPR7	Exercise 2: Effectiveness of FP and MP under fixed and flexible exchange rate regimes Exercise 2 answer sheet (additional graphs) Exercise 2 answer sheet - new
8 22.08	09.15-10.00 Review exercise 2. Download exercise 3 to work in groups. (Discuss findings).	Outline 8	KOM, ch 18 RR: AFC, ch-25, ch-26, ch-27; SRP8	Exercise 3: Long-term implications of persistent expansionary policy intervention Slides: session 8
Synthesis: Alternative Exchange Regimes, Optimal Currency Areas and Monetary Union
9 25.08	09.15-12.00 Section 9: Choosing from alternative exchange regime; optimal currency area; consideration of the criteria; economic integration and monetary union; Creating the EU; EU and the euro crisis, banking and fiscal union	Outline 9	KOM, ch 19 RR: AFC, ch 28 (pp. 705-15) SRP9 RR: Fin Times-EMU	Slides: session 9
29.08	10.15-12.00 Final exam review session	Final outline		Summary solutions: May 2018-May 2020 May 2020-Jan 2025 Exam Aug 2025
01.09	09.00-12.00 Final exam