Readings for ITF-220
(Cross-listed in FAS as Econ 1531)

Spring 2012


The required textbook reading is the second half of World Trade and Payments, R.Caves, J.Frankel, and R.Jones, 10th ed. (Addison-Wesley), 2007.  (Available from The COOP, or on reserve at the KSG library.) 

Additional readings are listed (& linked) below.

* asterisk denotes recommended readings
** double asterisk denotes most highly recommended
   (L numbers correspond to scheduled lectures.)
Please notify Minoo Ghoreishi Asst. to Prof. Frankel, of any problems with these links. (minoo_ghoreishi@harvard.edu)

HOW TO VIEW THE ECONOMIST ARTICLES LINKED HERE:
The initial link will take you to the citation and abstract page. At the top and/or bottom of that page will be a blue link to "html full text" of the article. Click this second link to see the full article.  Click here to see an illustration.

The Trade Balance and the Exchange Rate

Balance of payments accounts and devaluation (L1-L3)

Paul Krugman, "Introduction," in International Adjustment and Financing: The Lessons of 1985-1991, Fred Bergsten, ed., Institute for International Economics, Washington, DC, 1991: 3-12.** CMO packet 1

A Financial Times debate between Cooper and Obstfeld & Rogoff. (Financial Times.  Nov 1, 2004. p. 19) 

"America's current account deficit is not only sustainable, it is perfectly logical given the world's hunger for investment returns and dollar reserves," says Richard Cooper

"The US deficit problem is not only a domestic issue, but a global concern and neither candidate has the answer," say Maurice Obstfeld and Kenneth Rogoff

"Petri-dish economies: Poland--Fewwoes in Warsaw," Economist, April 30, 2011,p.83. **

 

The US trade deficit viewed as a transfer problem in a two-country world (L4-L8)

Paul Krugman "Adjustment in the World Economy,” Group of Thirty Occasional Papers 24, 1987, pp.1-40.  Reprinted in Currencies and Crises, 1992, pp. 3-25.  CMO packet 1  

"Global economic imbalances: When a flow becomes a flood" The Economist, Jan. 24, 2009.*
 

Fiscal Policy (L4-6, L13-16)

Martin Feldstein, 2009, "Rethinking the Role of Fiscal Policy," American Economic Review 99, no. 2, 556-559.**  

"A stimulating question: Can emerging economies now afford counter-cyclical politics?" The Economist, Dec. 13, 2008, p.90.*

"Economics focus: Much ado about multipliers," The Economist, Sept. 26, 2009, p. 90.**
 

Swan Diagram (L7)

"Balancing the World," Goldman Sachs Global Economics Weekly 08/07, Feb. 20, 2008. **

 

The Monetary Approach to the Balance of Payments

  The gold standard (L9)

Richard Cooper, “The Gold Standard: Historical Facts and Future Prospects,”  Brookings Papers on Economic Activity, I, 1982. Abridged in B.Eichengreen, The Gold Standard in Theory and History (Methuen: NY), 1995, pp.251-271.

Purchasing power parity (L10)

"The Big Mac index: An indigestible problem - Why China needs more expensive burgers," The Economist,  Oct. 14, 2010 **

Michael Pakko and Patricia Pollard,  “Burgernomics: A Big Mac Guide to Purchasing Power Parity,” Federal Reserve Bank of St. Louis Review, Nov/Dec 2003, 9-28. **

Rudiger Dornbusch, "Purchasing Power Parity." In J.Eatwell, M.Milgate, and P.Newman, eds., The New Palgrave, vol. 3 (Macmillan), 1987.  Or in Dornbusch, Exchange Rates and Inflation.  (HKS LIBRARY REFERENCE SECTION: Call Number: Ref H41 .N49 1987) 
early NBER Working Paper version
 
 

The Globalization of Financial Markets

The growth of the forex market and other modern financial markets (L11-12)

“Finance: Trick or Treat?”  The Economist, Oct. 23, 1999, p. 91-92.

“Future Perfect,” The Economist, Nov. 27, 1999, p. 81-82.                       

Emerging markets: inflows and crises (L12 & L18)

Guillermo Calvo, Leo Leiderman and Carmen Reinhart, “Inflows of Capital to Developing Countries in the 1990s, “ Journal of Economic Perspectives, 10, no. 2, Spring 1996, 123-139. **

"Capital Controls: Raining on India's Parade," The Economist, Oct. 31, 2009, p. 18. *

"Brazil's economy: Wild horses -- A soaring currency..." The Economist, Apr. 23, 2011
 

The International Monetary System

J. Frankel, “What’s ‘In’ and What’s ‘Out’ in Global Money,” Finance and Development 46, no.3, September 2009, 13-17.  
At http://www.hks.harvard.edu/fs/jfrankel/GlobalM-In&Out-Fin&Dev09.pdf
 

International Macroeconomic Policy Coordination (L19)

"Brown and Sarkozy seek fiscal boost," Financial Times, 12/8/08**
at http://www.ft.
com/cms/s/0/e25fe1cc-c574-11dd-b516-000077b07658.html         

"Fingers in the dyke,"  The Economist, 3/2109  **

Global Economic Policies and Prospects, Note by IMF, Meeting of the Ministers and Central Bank Governors, Group of Twenty, March 13-14, 2009, London, UK; especially Pages 1-9 and 26-36. 
http://www.imf.org/external/np/g20/pdf/031909a.pdf.

Thomas Willett, 1999, “Developments in the Political Economy of Policy Coordination,” Open Economies Review 10, 221-253. *


Supply (L20)

Paul Krugman, “How Did Economists Get It So Wrong,” New York Times Magazine, September 6, 2009, pp36-43.

“Some like it hot: Which emerging economies are at greatest risk of overheating?” Economist, July 2, 2011,  p.65   *
 

Exchange rate regimes: Fixed vs. Flexible (L21)

“Economics Focus: The Euro, Trade and Growth,” The Economist,  July 12, 2003, p. 70. *

"The ECB's Three Mistakes in the Greek Debt Crisis," J. Franekl, VoxEU, May 2011.

“The euro: Beware of falling masonry,” The Economist, Nov 26th, 2011. **


Determination of Exchange Rates 
(L22-23)

“Schools Brief: Why Currencies Overshoot,” The Economist, Dec. 1, 1990, p.89-90. * or  “Rudiger Dornbusch,”  The Economist, Aug. 10, 2002, p. 72

Schools Brief: “Monopoly Power Over Money,” and “Meddling in the Currency Market,” both in The Economist, Nov. 20, 1999, p.95-96.  *    

Mark Taylor, “The Economics of Exchange Rates,” Journal of Economic Literature, March 1995, 33, no.1.  


Bias in the Forward Exchange Market (L24)

Jeffrey Frankel “Getting Carried Away:   How the Carry Trade and Its Potential Unwinding Can Explain Movements in International Financial Markets,” Nov. 2007, Milken Institute Review.

Ken Froot and Richard Thaler, “Anomalies: Foreign Exchange,” Journal of Economic Perspectives 4, no.3, Summer 1990, 179-192.

 

back to ITF-220 course website homepage