PI-120 Lecture Dates, Topics and Tentative Problem-Set Due Dates
(Lecture titles contain links to corresponding in-class slides;
note that updates may be posted up until the actual date of the class.)

 

I. DEVALUATION AND THE TRADE BALANCE

1.       (9/7)    Course Introduction & Derivation of Marshall-Lerner condition; J-curve

II. THE MUNDELL-FLEMING MODEL

2.       (9/10) Keynesian trade balance; TB Empirically; Intro to the Mundell-Fleming model   

3.       (9/12) Monetary and fiscal policy with a fixed exchange rate; Reserve flows                        

4.       (9/17) The model with a floating rate, perfect capital mobility      

 

III. MONEY AND INFLATION

5.       (9/19) Aggregate Supply, money growth and inflation                                                                                         

6.       (9/24) Monetary policy: Dynamic inconsistency and rules                                                \

7.       (9/26) Seignorage and hyperinflation                                                                   

IV. PURCHASING POWER PARITY

8.       (10/1) Does PPP hold empirically?  Patterns of PPP deviations.  How long do they last? 

9.       (10/3) Why does PPP fail?  Sticky prices; Tariffs & transp.costs;  Non-traded goods                   

 

V. SMALL OPEN ECONOMIES 

           
10.   (10/5)   Devaluation in small countries                                                       

11.  (10/15) The Salter-Swan ("Nontraded Goods") Model                 

12.   (10/17)  Dutch Disease                                                     
 

VI. EXCHANGE RATE REGIMES

                (Slides for Lecture 13&14 are all in the same single file; link from either lecture title above)

13.   (10/22)      Classification; Pros and cons of fixed vs. floating rates

14.   (10/24)   Optimum Currency Areas & Currency Unions

15.   (10/29)                                                                   Midterm Exam           

 

VII. INTEGRATION OF FINANCIAL MARKETS  

               (Slides for Lectures 16 & 17 are all in the same single file; link from either lecture title below)

16.   (10/31)  The theory of gains from intertemporal trade;                                                  

17.   (11/5)     Interest Rate Parity (covered, uncovered, real)  

VIII. MONETARY MODELS OF EXCHANGE RATE DETERMINATION

                (Slides for Lectures 18 & 19 are in the same single file; link from either lecture title below)

18.   (11/7) Flexible-price models; Bubbles                                                                                           

        [ Veterans Day holiday]

19.   (11/14) Sticky-price models and overshooting                              

 

IX. CRISES IN EMERGING MARKETS

20.   (11/19) Speculative attack models                                    

21.   (11/26) Warning indicators; Sudden Stops; Contagion; IMF; Contractionary devaluation                                                                
      (Slides for Lecture 21 are contained in 2 separate large files.) LINKS HERE: L21a, L21b

X. THE CARRY TRADE, RISK, AND PORTFOLIO DIVERSIFICATION

22.   (11/28) Forward bias & the carry trade

23.   (12/3)  Optimal portfolio diversification

24  (12/5) Sovereign risk and Appendix on fiscal procyclicality