ECN320 Open Market Macroeconomics

Course description and lecture plan (spring 2020): [updates for 2020 in progress]

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

Session / date	Description of Lecture Topic	Lecture Outline	Reading Assignment (SRP subject to updates)	Handouts, Slides and Exercises (Slides subject to last-minute changes)
Module 1. Linking the Domestic Macroeconomy to International Transactions
1 04.02	08.15-09.00 Course overview, objectives and requirements; intro	Outline 1	KOM, ch 13 Krugman, Obsfelt and Melitz (KOM) SRP1	Slides: session-1
	09.15-12.00 Section 1.1-1.7: Macro income accounting analysis; BOT; BOP; international reserves
2 11.02	09.15-12.00 Section 1.7: International reserve currency; 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); RR: AFC, ch 20 Appleyard, Field and Cobb (AFC) SRP2 RR: Houck, ch 15	Slides: session-2
14.02	12.15-14.00 Review of trade policy analysis; optional session for those who are interested		RR: Houck, ch 15
3 18.02	08.15-11.00 Download exercise 1 for in-class group work. (prepare to present results and discuss insights)	Outline 3	KOM, ch 14, 16; RR: AFC, ch 23 RR: Houck, ch 15 SRP 3	Exercise 1: Modeling trade flows from exchange rate changes Exercise 1 answer sheet
	11.15-12.00 Section 3.6: devaluation and depreciation, Marshall-Lerner condition, J-curve effect
Module 2. Money, Goods and Asset Market Equilibrium
4 25.02	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; capital controls	Outline 4	KOM, ch 14-16 (focus on interest rate/asset returns) SRP4	Slides: sessions-4
5 03.03	09.15-12.00 Section 5.3-5.4: 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)	Outline 5	KOM, ch 16-18; RR: AFC, ch-25, ch-26; SRP5	Slides: session-5 Interest parity and dynamic adjustment
6 10.03	08.15-09.00 Section 7: Fiscal and monetary policy; theoretical considerations; FP and MP effectiveness under fixed and flexible exchange rates regime	Outline 6	KOM, ch 18; RR: AFC, ch-25, ch-26 SPR6	Exercise 2: Effectiveness of FP and MP under fixed and flexible exchange rate regimes Exercise 2 answer sheet (additional graphs)
	09.15-12.00 Download exercise 2 for in-class group work. (prepare to present results and discuss insights)
7 17.03	08.15-10.00 Review exercise 2 (present and discuss findings). Group work on exercise 3.	Outline 7	KOM, ch 18; RR: AFC, ch-25, ch-26, ch-27; SRP7	Exercise 3: Long-term implications of persistent expansionary policy intervention Slides: session 7
	10.15-12.00 Sections 8.1-8.2: Monetary targets, inflation/deflation (inflation targeting), inflation-unemployment (Phillips curve), non-traditional monetary policy, state of macroeconomics
Synthesis: Alternative Exchange Regimes, Optimal Currency Areas & Monetary Union
8 24.03	08.15-12.00 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 8	KOM, ch 19; RR: AFC, ch 28 SRP8 Backgrounder: Eurozone crisis RR: FT-EMU	Slides: session-8
05.05	09.15-11.00 Final exam review session			Summary solutions: May 2018-Jan 2020
15.05	14.00-17.00 Final exam