This course deals with the macroeconomics of open economies. The emphasis will be on models appropriate to major countries. Topics covered include: the foreign exchange market, devaluation, and import and export elasticities; the simultaneous determination of the trade balance, national income, the balance of payments, money flows, and price levels; capital flows and our increasingly integrated financial markets; the transfer problem; monetary and fiscal policy in open economies; international macroeconomic interdependence and policy coordination; supply relationships and nominal anchors for monetary policy; the determination of exchange rates in international money markets; and international portfolio diversification.
Also offered by the Economics Department as Economics 1550.
Prerequisites: Microeconomics at the level of API-101 and macroeconomics at the level of API-121. Knowledge of international trade theory and econometric techniques is also desirable, but not essential. Students must be very comfortable with algebra.