The course is the first in the two-course sequence on macroeconomic policy in the MPA/ID program. It focuses on the international dimension of macroeconomic policy, particularly monetary, fiscal, and exchange rate policy, and on the determination of the current account balance, national income, and inflation. Aims are price stability and countercyclical macro policy. Attention is given to developing countries and other small open economies, defined as those for whom prices are determined on world markets. Included are contractionary effects of devaluation and models that focus on the price of internationally traded goods in terms of non-traded goods. A major overall theme is the implication of increased integration of global financial markets. Another is countries' choice of monetary regime, especially the degree of exchange rate flexibility and ways that central banks can credibly commit to noninflationary monetary policy. Implications of commodity exports and emerging market crises are both covered.
This course is open to qualified non-MPA/ID students only by permission of the instructor.