The International Economics
Study Center
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Econ 6284
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Professor: Steve Suranovic | ||
Time & Location: Wednesdays, 5:10-7pm |
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Main Office: 1957 E St, Room 502B | ||
Office Hours: Wednesdays 3-4:45pm | ||
Office Phone: 994-7579 | ||
E-mail: smsuran@gwu.edu | ||
Readings |
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TEXTBOOK: This course will use
my International Economics text available in
several distinct formats from Flat World Knowledge. You may access the text at https://students.flatworldknowledge.com/course/1709079. You must register at the website first and you will be given several purchase options including, a Study Pass for $24 or an All Access Pass for $42. |
Practice Problems |
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To prepare for the quizzes and exams it is advised that you work through the practice problems located at the end of each assigned reading section. An answer key will be provided. |
Evaluation |
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6 Quizzes (20 min. each) |
10% each | |
1 Final Exam | 50% |
Exam Schedule |
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Quiz #1 | Sept 10, 2014 | |
Quiz #2 | Sept 24, 2014 | |
Quiz #3 | Oct 8, 2014 | |
Quiz #4 | Oct 22, 2014 | |
Quiz #5 | Nov 12, 2014 | |
Quiz #6 | Dec 2, 2014 | |
Final Exam | Dec 10, 2014 (tentative) |
Note: Makeup quizzes or exams will be considered only for emergencies or conflicts outside the student's control and only with prior approval.
Course Outline | |
Aug 27 |
Introduction to International Economics, Financial History, Law, and Institutions This first session provides an overview of the real world with respect to international finance. It explains not only how things look now but also where we have been and why things changed along the way. It describes current economic conditions and past trends with respect to the most critical international macroeconomic indicators. In particular, it compares the most recent worldwide economic recession with past business cycle activity to put our current situation into perspective. The chapter also discusses important institutions and explains why they have been created.
Readings:Chapter 1 - Introductory Finance Issues: Current Patterns, Past History, and International Institutions Supplementary Readings:US Annual GDP Data 1929-2014-II The Latest International Data Problems with GDP as an Economic Barometer US
National Income and Product Accounts (NIPA)
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Sept 3 |
National Income Accounts & the Balance of Payments This session presents the national income identity, which defines the GDP. It also presents several other important national accounts, including the balance of payments, the twin-deficit identity, and the international investment position. These are the variables of prime concern in an international finance course.
Readings:Chapter 2 - National Income and the Balance of Payments Accounts US Twin Deficit Identity 1990-2013 China Twin Deficit Identity 1978-2014 Japan Twin Deficit Identity 1982-2014 International Investment Position Data Imports and Economic Growth Supplementary Readings:US International
Accounts Data |
Sept 10 |
Evaluation of Trade Imbalances This session dispels the popular notion that trade deficits are "bad" and trade surpluses are "good". The material highlights the intertemporal borrowing and lending associated with trade imbalances and notes situations in which each of these could be appropriate (or inappropriate) for both individuals and for nations. Key factors needed to determine the seriousness of a trade imbalance are discussed and a case study for the US is presented.
Readings:Chapter 3 - The Whole Truth about Trade Imbalances US Trade Deficits and Unemployment |
Sept 17 |
Exchange Rates, Interest Rates and Interest Parity This session introduces the foreign exchange market for currency trades. It highlights some of the more obvious, although sometimes confusing, features and then turns attention to the motivations of foreign investors. One of the prime motivations for investing in another country is because one hopes to make more money on an investment abroad. How an investor calculates and compares those rates of returns are explored in this session.
Readings:Chapter 4 - Foreign Exchange Markets and Rates of Return Supplementary Readings:Trade, exchange rates, budget balances and interest rates | The Economist | Sept 2014 De Facto Classification of Exchange Rate Arrangements and Monetary Policy Frameworks, April 30, 2013 |
Sept 24 |
Interest Rate Parity This session introduces the interest rate parity theory of exchange rate determination. It shows how changes in the determinants of the rate of return on assets affect investor behavior on the foreign exchange market, which in turn affects the value of the exchange rate.
Readings:Chapter 5 - Interest Rate Parity |
Oct 1 |
Purchasing Power Parity This session presents the theory of purchasing power parity.
The logic of the theory as an explanation for exchange rate movements
is provided. More importantly, the supplemental readings help teach
the way PPP exchange rates are used to make international comparisons
of economic data.
Readings:Chapter
6 - Purchasing Power Parity Big Mac Data Set Supplementary Readings:The
Economist's Big Mac Index Comparative
Price Levels for OECD countries
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Oct 8 | Monetary Policy, Interest Rates and Exchange Rates This session presents the basic model of interest rate determination and then links it with the interst rate parity model for exchange rate determination.
Readings:Chapter 7 - Interest Rate Determination
Read all sections. |
Oct 15 | GDP Determination This session presents the Keynesian demand driven model of GDP determination. It is the same model presented in introductory econ classes but with international variables explicitly included.
Readings:Chapter 8 - National Output Determination
Read all sections. |
Oct 22 |
The AA-DD Model This session uses the AA-DD model to asses the
effects of fiscal and monetary policy in a system of floating
exchange rates. Both short-run and long-run impacts are considered.
We'll also look at the predictions of the model for a sterilized
monetary intervention.
Readings:Chapter 9 - The AA-DD Model
Read all sections. |
Oct 29 |
Fiscal and Monetary Policy with Floating Exchange Rates This session uses the AA-DD model to asses the
effects of fiscal and monetary policy in a system of floating
exchange rates. Both short-run and long-run impacts are considered.
We'll also look at the predictions of the model for a sterilized
monetary intervention.
Readings:Chapter 10 - Policy Effects with Floating Exchange Ratesces
Read sections 1 - 4. |
Nov 5 |
No Class Today
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Nov 12 |
Long-Run Effects of Monetary Policy; Central Bank FOREX Interventions; Fixed Exchange Rates This session introduces discusses long-run effects
of monetary policy and central bank interventions in a floating
suystem. Next fixed exchange rate systems are introduced and it
is shown how central bank intervention is necessary to make them
credible.
Readings:Chapter 10 - Policy Effects with Floating Exchange Ratesces Chapter 11 - Fixed Exchange Rates |
Nov 19 |
Policy Effects with Fixed Exchange Rates This session uses the AA-DD model to asses the
effects of fiscal and monetary policy in a system of floating
exchange rates. Both short-run and long-run impacts are considered.
We'll also look at the predictions of the model for a sterilized
monetary intervention.
Readings:Chapter 12 - Policy Effects with Fixed Exchange Rates
Read sections 1 - 5. |
Tuesday, Dec 2 - Makeup Class |
Gold Standard, Bretton-Woods, and Current Issues This session looks at historical fixed exchange
rate systems and discusses their workings and failures
Readings:
Supplementary Readings:Lessons
from the Asian Crisis The
Pre-World War I Gold Standard |
Dec 3 |
Fixed vs. Floating Exchange
Rates
This session presents a brief overview of the differences
between fixed and floating exchange rates.
Readings:
Supplementary Readings:Fixed
or Flexible? Getting the Exchange Rate Right in the 1990s
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Final Exam: Wednesday, Dec 10, 5:20-7:20pm |