| ECON
463/663 - International Monetary Relations Spring 2008 |
Professor
Elliott Parker
Office: AB 319-C |
| MW 1:00 - 2:15 PM WRB 2006 |
Office
Hours: WRF 10:00-10:50 AM
or email me for an appointment |
Short
Syllabus | Books
| Grading/Grad
Students | Homework
| Lecture Schedule
| Links
Quiz 1 (with key and scale) | Quiz 2 (with key) | Midterm Exam (key) | Quiz 3 (key) | Quiz 4 (with key) | Final Exam (key)
Course Description
This course is intended as an overview of the theory of international monetary relations, which economists often call international finance or international macroeconomics. It is essential that you have passed your principles courses (ECON 102 and 103), and have a working knowledge of algebra and geometry, for we will learn many of the tools of the economist. Topics covered will include foreign exchange markets and why the Dollar rises and falls, balance of payments accounting and the causes of trade deficits, capital mobility, government fiscal and monetary policies, exchange rate regimes and how they sometimes change how economies behave, models of international macroeconomic cooperation and integration, the role of international institutions such as the International Monetary Fund, and international macroeconomic crises such as currency collapses.Need a short review? Here are my EC 101 Lecture Notes: Introduction to International Economics.This course counts as an international business major course. This course builds upon material taught in ECON 462/662 (International Trade), but because the material differs substantially that course is recommended but not a prerequisite. By focusing on the overall economic effects of exchange rate regimes and government policy, this course differs substantially from FIN 308 (International Financial Management) which primarily considers the perspective of the firm. ECON 303 (Intermediate Macroeconomics) and ECON 304 (Money and Banking) also provide excellent preparation for this course, but neither are required.
Books:
 |
Paul R. Krugman & Maurice Obstfeld (2006), International Economics: Theory and Policy, Seventh Edition. Addison-Wesley, ISBN 0-321-27884-4, Required. This is probably the best-selling and most-respected undergraduate textbook in the field, though it can be dense reading at times. Professor Krugman is now at Princeton (formerly at MIT), and is the author or co-author of hundreds of published economic research papers, dozens of books, and many provocative opinions in his regular column in the New York Times. Check out the Unofficial Krugman Website, and click on "International Trade" on the left bar to get some of his relevant columns. Professor Maurice Obstfeld also has a very impressive record of academic publications and is one of the top-ranked economists in the world, but he is not so much in the public eye. | |
This book is available at the ASUN Bookstore in Jot Travis Student Union (JTSU) for $148.67 new, $111.50 used. You can sometimes save some money by ordering it online through companies like Amazon.com, Varsitybooks.com, or ecampus.com. Bigwords.com provides price comparisons. Ordering online sometimes avoids sales tax, but you usually pay shipping & handling costs, delivery times are not always prompt, and returns may be problematic. |
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Samples to Study:Group Homework will be assigned weekly, and be done in groups of three or four persons. You will turn in one homework per group, and grade the contribution of your classmates to the group. Individual country studies will be assigned with the group homework, but must be turned in individually. Four quizzes will be announced in advance, and are intended to check your understanding of the basic models. Exams will be generally problem-oriented, and based on the textbook, homework and lectures. The final examination will be given at the time listed in the Spring Schedule, and university policy forbids early exams. Makeups will be given only under very unusual circumstances.
- Weekly group homework (totaling 25%), with peer evaluations;
- Three individual country studies (15% total);
- Best three out of four quizzes (15% total);
- Midterm examination (20%); and
- Final examination (25%).
Good participation and attendance will help your grade if you are on the margin; I expect that you will not arrive late or leave early without explanation, and I expect you to keep up with the assigned readings and contribute to class discussion.
Spring 2007: Quiz 1 (key), Quiz 2 (with key), Quiz 3 (key), Quiz 4 (key), Midterm Exam (key), and Final Exam (key + correction)
Spring 2006: Midterm (key), Final Exam, Quiz 1, Quiz 2, Quiz 3, Quiz 4, and Quiz 5.
Spring 2005: Midterm (key), Final Exam, Quiz 1, Quiz 2, and Quiz 3.
There are some questions from old ECON 458 exams that are relevant for the midterm:For the final exam, there are also old exams from ECON 458 (see Fall 2001 and Fall 2002) that will cover some of this material.
- Fall 2003 First Midterm (see question #5)
- Fall 2002 First Midterm (#3, #7), with key
- Fall 2001 First Midterm (#4, bonus question)
- Fall 2000 First Midterm (#4)
- Fall 2002 Second Midterm (#5, #6, #7), with key
- Fall 2001 Second Midterm (#4, #5)
Cheating:
Any cheating will be severely punished, ranging from failing the exam or assignment at a minimum to failing the course and even expulsion from the university, in egregious cases or in cases where there is evidence of any prior offenses. Students who are caught cheating also lose their chance at college scholarships. Cheating includes both copying someone else's work as well as letting your work be copied, bringing in notes, text messaging or taking pictures of the exam, plagiarizing other people's words or ideas and passing them off as your own, et cetera. I am serious as a heart attack about this.
School and Work:| Work Hours Per Week | Credits Taken per Semester |
| 10 | 15 |
| 20 | 12 |
| 30 | 9 |
| 40 | 6 |
These maximum recommendations work both ways. For example, a student working 10 hours per week should not take more than 15 credits and conversely, a student who is taking 15 credits should not work more than 10 hours per week. Of course, many of you will choose to exceed these maxima, but you should know that unless you have superpowers or take extremely easy courses, you are setting yourself up for lower grades, inadequate sleep, or other trouble. If you do not have scholarships or other means of support, then you might consider taking fewer credits per semester and an extra year or two to graduate.
Graduate Student Requirements:To receive graduate credit for this course, significant additional work is required. Graduate students must do additional problems on the exams, do the homework, and also write a research paper. The group homework will count for 25% of the grade, the midterm will count for 25% of the grade, the final will count for 25%, and the research paper will count for 25%. Quizzes will not be graded, though graduate students may take them for feedback. Any deviation to these weights must be negotiated with the professor by the beginning of the second week.See the graduate student requirements, with details on research paper requirements. This is for a previous Spring, but the only thing that has really changed are the due dates: I will announce actual due dates later, but Part 1 is approximately due the middle of March, Part 2 in the first week of April, Part 3 in the last week of April, and Part 4 is due after the final exam.
Lectures will generally
follow the order
of the chapters in the Krugman & Obstfeld (K&O)
textbook.
The topics are arranged as follows:
Lecture Schedule: |
|
Homework is done in groups of 3-4 students, and each group turns in one complete set. Though work may be divided up, your group is expected to discuss the entire homework together, and you are all responsible for your joint answers. It is unacceptable to not meet at once per homework assignment, or to assemble the homework in a mad scramble at the start of class. It is also foolish, because if you don't understand the homework you will find the exams to be impossible.
Your group's homework is due at the start of the class period on the due date, and late homework will be penalized. Each chapter will receive a separate grade, but it can be turned in together. The homework assignment is expected to be in order, complete, and legible, otherwise your grade will be marked down. It will usually take me a week to return the graded homework.
On the day
your homework set is turned in, you must turn in a confidential
evaluation of your group members rating them for their contribution to
all chapters assigned in the set. "Confidential" means that
you can't
show it to your group members and you can't discuss it with
them.
On a piece of paper or an e-mail, put your name first so I know whose
evaluation
it is, then list the other members of your group. For a
three-person
group, give yourself no more than 34% (you may give
yourself less),
and then divide the other 66% between the other two members.
For
a four-person group, give yourself no more than 25%
(you may give
yourself less), and then divide the other 75% between the other three
members. Round
to the nearest percentage (no fractions, please), and make sure that
the
total adds up to 100%, or I may send it back to you
and treat it
as a missing evaluation. For example:
| Group 1 Evaluation Homework Set #4
|
Turn your evaluation in on a peice of paper, folded over, or just send me an email at elliottp@unr.edu. (Be sure not to send it to the class email list!) I will then sum up the scores to determine your overall evaluation, and your individual grade is the group's grade for each chapter times your overall evaluation for the set. I will report your group grade and each student's overall evaluation score when I return your homework, but not how each student evaluated you. It is not acceptable for students to discuss evaluations in advance, or to try to uncover the evalution given by any individual group member.
It is important that you turn this
in, and you need to identify yourself
on it. If I cannot determine who turned in the evaluation, I
will
treat it like a missing evaluation. If your evaluation for
your group
is not turned in to me before I grade the homework, I will assign you
10%
and divide the other 90% equally among your partners, and you will be
unpleasantly
surprised when you get your grades back. For example:
| Group 1 Evaluation (as given by the instructor) Homework Set #4
|
There are two exceptions: 1) if all but one member of a group turn in evaluations, and they are all consistent, then I will approximate the missing evaluation; 2) if a student drops the course, then I will divide his or her points among the other group members only for homework in which they were depending on him or her. Then I will reduce the group size and/or readjust the groups.
If your group is not satisfied with the results of an evaluation (perhaps because some evaluations were not turned in), then you may be re-evaluated. In order to ensure that such a re-evaluation is a Pareto Improvement, all members of your group must re-submit their evaluations to me in individual e-mails. Once I receive e-mails from all members, I will then notify your group by e-mail if the evaluation has changed.
I
reserve the right to adjust groups and their evaluations as I see
fit. If I can correct small errors, I will.
| Country Studies Assignment #1: For the first country study, I want you to find annual GDP and international transaction data for your country dating back a decade or more. Give me a graph that shows major components of the balance of payments as a percentage of nominal GDP. Make sure you include the current account balance, foreign direct investment, and international reserve transactions by your country's central bank, along with any other components you think are important and relevant for your country. Describe and explain your graph. Next, find information on the currency your country uses, and how its exchange rate has changed over the past decade or more against the dollar. Monthly numbers would be great, but annual is OK if that's all you can find. If the currency has changed, e.g. from the Mark to the Euro, then show before and after exchange rate changes on your graph. I want you to show all exchange rates in European terms against the U.S. Dollar, i.e. the direct exchange rate of how much each unit of your country's currency would cost in Dollars. If you are using a country that now uses the Euro, it is probably obvious to you that you would report both the growth rate of the Euro and, prior to that, the growth rate of the original currency (e.g., the Franc, Mark, Lira, et cetera). If your country now uses another currency, i.e. the Dollar, you should focus on the decade or so before they dollarized. A good place to start looking for data is the IMF's International Financial Statistics, which are available in the library (current reports at the reference desk, old reports on the second floor). As you are looking for data, keep an eye out for interest rates, forward exchange rates, inflation rates, money supply, and other financial data. You will need them in later country studies. If you can't find data, you might need to quickly change countries. This is a professional brief, not a major academic paper. A few pages, typed, plus graphs should be enough. Give me the hard copy, and don't e-mail it to me unless I request it. Make it look professional, something an employer would be impressed with. Also, cite your sources. Later: A couple of students have asked me questions about what I want the country study graph to look like. To help answer this, I went to the BEA website http://www.bea.gov to look up GDP and BOP data. I then put it in a spreadsheet and created a graph. Of course, none of you are doing the USA. Assignment #2:
Assignment #3: You should already have data for your country on GDP, the direct exchange rate, inflation, and interest rates. Now see if you can find data on the money supply. Again, annual data is fine for our purposes here, though if possible I would like you to get more than ten years of data. In a brief of two pages or so, I would like you to describe patterns over the last ten years or more in money growth, inflation, interest rates, and real GDP growth. Do you see any patterns? For example, is inflation correlated with money growth, do interest rates change when inflation changes or when the money supply changes, is money growth correlated with real GDP growth, and what seems to explain short-run and long-run movements in the exchange rate? Remember that real GDP is nominal GDP divided by the deflator ratio. The deflator ratio is the price level at a given point in time divided by the price level of some specific base period. If you take your three country studies, fix the problems that were commented on, and make them all into a single coherent paper, with a cover page, an introduction, a conclusion, and references, I will give you bonus points roughly equal to a fourth country study. Put a little in the paper about your country and its international monetary system. Turn it in by Friday, May 9. Keep a copy for yourself, because they will not be returned. Here are a few sample country studies which received grades of A or A-: Segura #1, Segura #2, & Segura #3; Vacek #1, Vacek #2, & Vacek #3 (plus Excel spreadsheets for graphs, for E, R, and M); Whipple 1, 2, & 3; Grumstrup #1 & Grumstrup #3; and Oxborrow #1 & Oxborrow #3. |
The
Federation
of International Trade Associations (FITA) has a lot of
country information
on their website, along with a new site for finding jobs in
international
business.
Want
to know exchange rates? Check out this currency
converter by OANDA, Inc.
International
agencies you might check out include the World
Trade Organization Homepage, the United
Nations, the Bank
for International Settlements,
the Organization for
Economic Co-operation
and Development, and the World Bank.
There is also a site with links to foreign
embassies.
United
States government agencies with good international data include US
Customs, the U.S.
Trade Representative,
the Department of Commerce (see the Bureau of the
Census, the International
Trade Administration, and the Bureau of
Labor Statistics),
the International Trade
Commission.,
and the Central
Intelligence Agency Factbook (the homepage of the CIA itself
is, as you might guess, a secure site.)
See also the FedWorld
Federal Internet
Resource Locator.
Information
on international treaties and regulations and be found at:
- Tufts University's Reference Material on Trade and Commercial Relations: Treaties and Conventions
- Carnet Information from the US Council for International Business
- Code of Federal Regulations
International
business references include International
Business Resources on WWW, Shipping
Digest - shipping industry news, sailing schedules, and
related industry
sites, and BrokerPower
- a wealth
of trade news and information.
Good
international information may be also found at the Financial
Times website, the website for The
Economist, the International
Center
for Economic Growth, et cetera.
Search
the UNR Library through Wolfpac
for
books or journals. They also have a long list of business/economics
databases for article citations, abstracts, and statistical
information,
including a good index of economic journals, especially Econlit
from the Journal of Economic Literature, and a lot
of other good
reference information. Many economics journals now have
websites
(the library has a different list of online business/economic
journals),
and you can find an article, read its abstract, and order it if you
want
the whole thing through interlibrary loan.
If
you find any errors or know of any other good international websites,
email
me!
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