International Monetary Theory and Policy ECON 5602 S

Transcription

1 Department of Economics Carleton University International Monetary Theory and Policy ECON 5602 S Raul Razo-Garcia 2011 Early Summer CONTACT INFORMATION Professor: Raul Razo-Garcia Office: A-804 Loeb Building Course Website: The course web site will be hosted by WebCT. All communication will be conducted via WebCT (do not forget to set up your WebCT account). COURSE INFORMATION Lectures: Monday and Wednesday from 10:10 am to 12:55 pm Location: TBA Office Hours: Wednesday 14:30-16:30; or by appointment Textbook: Maurice Obstfeld and Kenneth Rogoff, Foundations of International Macroeconomics, MIT Press, Supplementary text: Nelson C. Mark, International Macroeconomics and Finance, Blackwell Publishing, GRADING: Paper Presentation (23%) Participation during presentations (2%) Referee Report (due in Lecture on June 13 th ) (20%) Final Examination (covering the whole course) on June 15 th (55%). Presentation: Starting on May 30 th one or two students/teams will present a paper from topics 2 or 6 of the reading list. In the second week of classes I will assign the paper and the presentation dates for each student/group (maximum 2 students depending on the enrollment). The student/group will present for about 45 minutes with the requirement that ALL the members of the team will be responsible for one part of the presentation. At any point in the presentation I have the right to ask any member of the team any question related to the paper and/or to continue with the presentation. Handouts for the entire class must be distributed. The grade will be based on an individual basis. Referee Report: By May 18 th, the students will be asked to choose one paper from topic 5 of the reading list (Currency Crises). Each student will have to summarize and provide a critical assessment of the paper (e.g. potential problems, inconsistencies, etc..), establishing its value added to the literature in the manner of a short referee report (four pages, 1.5 spaced). This in an individual assignment.

2 Final: Failure to write the final examination will result in a grade of ABS ( ABSent from a required final examination ). Application to write a deferred final examination must be made at the Registrar s Office. Plagiarism: Please be aware that plagiarism is serious offence at Carleton and should be recognized and avoided. For further information on how to do so, please see Pammett on Plagiarism and Paraphrasing at ACADEMIC ACCOMMODATIONS You may need special arrangements to meet your academic obligations during the term. For an accommodation request the processes are as follows: 1. For Pregnancy: write to me with any requests for academic accommodation during the first two weeks of class, or as soon as possible after the need for accommodation is known to exist. For more details visit the Equity Services website: guide.htm 2. For Religious obligations: write to me with any requests for academic accommodation during the first two weeks of class, or as soon as possible after the need for accommodation is known to exist. For more details visit the Equity Services website: guide.htm 3. For Students with disabilities: Students with disabilities requiring academic accommodations in this course must register with the Paul Menton Centre for Students with Disabilities (PMC) for a formal evaluation of disability-related needs. Documented disabilities could include but are not limited to mobility/physical impairments, specific Learning Disabilities (LD), psychiatric/psychological disabilities, sensory disabilities, Attention Deficit Hyperactivity Disorder (ADHD), and chronic medical conditions. Registered PMC students are required to contact the PMC, , every term to ensure that I receive your Letter of Accommodation, no later than two weeks before the first assignment is due or the first in-class test/midterm requiring accommodations. If you only require accommodations for your formally scheduled exam(s) in this course, please submit your request for accommodations to PMC by the deadlines published on the PMC website:

3 Reading List: 1 Traditional Models of International Monetary Economics Dornbusch, R. (1976): Expectations and Exchange Rate Dynamics, The Journal of Political Economy, 84. Engel, C., N. C. Mark, and K. D. West (2007): Exchange Rate Models Are Not as Bad as You Think, National Bureau of Economic Research Working Paper Series, No Mundell, R. A. (1961): A Theory of Optimum Currency Areas, The American Economic Review, 51. Mundell, R. A. (1963): Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates, The Canadian Journal of Economics and Political Science, 29, Rogoff, K. S. (2002): Dornbusch s Overshooting Model After Twenty-Five Years, IMF Working Paper, pp Obstfeld-Rogoff, , New Open Economy Macroeconomics Chari, V. V., P. J. Kehoe, and E. R. McGrattan (2002): Can Sticky Price Models Generate Volatile and Persistent Real Exchange Rates?, The Review of Economic Studies, 69. Choudhri, E. U., H. Faruqee, and D. S. Hakura (2005): Explaining the exchange rate pass-through in different prices, Journal of International Economics, 65(2), Devereux, M. B., and C. Engel (2003): Monetary Policy in the Open Economy Revisited: Price Setting and Exchange-Rate Flexibility, Review of Economic Studies, 70, Duarte, M., and M. Obstfeld (2007): Monetary Policy in the Open Economy Revisited: The Case for Exchange Rate Flexibility Restored, manuscript, University of Toronto and UC Berkeley. Engel, C. (2002): Expenditure Switching and Exchange-Rate Policy, NBER Macroeconomics Annual, 17, Ghironi, F., and M. J. Melitz (2005): International Trade and Macroeconomic Dynamics with Heterogeneous Firms*, Quarterly Journal of Economics, 120, Lane, P. R. (2001): The new open economy macroeconomics: a survey, Journal of International Economics, 54(2), Obstfeld, M., and K. Rogoff (1995): Exchange Rate Dynamics Redux, Journal of Political Economy, 103, (2000): New Directions for Stochastic Open Economy Models, Journal of International Economics, 50, Obstfeld-Rogoff, Ch 10. Mark, Ch 9

4 3 The Intertemporal Approach to the Current Account Feldstein, M., and C. Horioka (1980): Domestic Saving and International Capital Flows, Economic Journal, 90(358), Kraay, A., and J. Ventura (2000): Current Accounts In Debtor And Creditor Countries, The Quarterly Journal of Economics, 115(4), Nason, J. M., and J. H. Rogers (2006): The present-value model of the current account has been rejected: Round up the usual suspects, Journal of International Economics, 68(1), Obstfeld, M., and K. Rogoff (1995): The intertemporal approach to the current account, in Handbook of International Economics, ed. by G. M. Grossman, and K. Rogoff, vol. 3, pp Elsevier. Obstfeld-Rogoff, Ch Exchange Rate and Prices Atkeson, A., and A. Burstein (2007): Trade Costs, Pricing to Market, and International Relative Prices, manuscript, UCLA. Dornbusch, R. (1987): Exchange Rates and Prices, The American Economic Review, 77. Gopinath, G., and R. Rigobon (2008): Sticky Borders, Quarterly Journal of Economics, 123(2), Imbs, J., H. Mumtaz, M. O. Ravn, and H. Rey (2005): PPP Strikes Back: Aggregation and the Real Exchange Rate, Quarterly Journal of Economics, 120(1), Jeanne, O., and A. K. Rose (2002): Noise Trading And Exchange Rate Regimes, Quarterly Journal of Economics, 117(2), Khan, M. S., and E. U. Choudhri (2004): Real Exchange Rates in Developing Countries: Are Balassa-Samuelson Effects Present?, IMF Working Papers 04/188, International Monetary Fund. Meese, R., and K. Rogoff (1983): Empirical Exchange Rate Models of the Seventies, Journal of International Economics, 14, Obstfeld, M., and K. Rogoff (2000): The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?, NBER Macroeconomics Annual, 15, Obstfeld-Rogoff, Ch 4. 5 Currency Crises Flood, R. P., and P. M. Garber (1984): Collapsing exchange-rate regimes : Some linear examples, Journal of International Economics, 17(1-2), 1 13.

5 Jeanne, O. (2000): Currency Crises: A Perspective on Recent Theoretical Developments, Princeton Special Papers in International Economics, 20. Kaminsky, G. L. (1998): Currency and banking crises: the early warnings of distress, International Finance Discussion Papers 629, Board of Governors of the Federal Reserve System (U.S.). Krugman, P. (1979): A Model of Balance-of-Payments Crises, Journal of Money, Credit and Banking, 11(3), Morris, S., and H. S. Shin (1998): Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks, American Economic Review, 88(3), Obstfeld, M. (1996): Models of currency crises with self-fulfilling features, European Economic Review, 40(3-5), Obstfeld, M., and K. Rogoff (1995): The Mirage of Fixed Exchange Rates, The Journal of Economic Perspectives, 9. Obstfeld-Rogoff, 8.4. Mark, Ch 11 6 Recent Studies in International Macroeconomics Bjrnl, H. C. (2009): Monetary policy and exchange rate overshooting: Dornbusch was right after all, Journal of International Economics,79(1), Chari, V., P. J. Kehoe, and E. R. McGrattan (2008): New Keynesian Models: Not Yet Useful for Policy Analysis, NBER Working Papers 14313, National Bureau of Economic Research, Inc. Devereux, M. B., and A. Sutherl (2010): Valuation effects and the dynamics of net external assets, Journal of International Economics, 80(1), Edwards, S., and R. Rigobon (2009): Capital controls on inflows, exchange rate volatility and external vulnerability, Journal of International Economics, 78(2), Fratzscher, M. (2009): How successful is the G7 in managing exchange rates?, Journal of International Economics, 79(1), Galí, J., and T. Monacelli (2008): Optimal monetary and fiscal policy in a currency union, Journal of International Economics, 76, Gourinchas, P.-O., and O. Jeanne (2006): The Elusive Gains from International Financial Integration, Review of Economic Studies, 73(3), (2007): Capital Flows to Developing Countries: The Allocation Puzzle, Quarterly Journal of Economics. Gourinchas, P.-O., and H. Rey (2007): International Financial Adjustment, Journal of Political Economy, 115(4),

6 Obstfeld, M., J. C. Shambaugh, and A. M. Taylor (2008): Financial Stability, the Trilemma, and International Reserves, Discussion paper, National Bureau of Economic Research, Inc. Obstfeld, Maurice (2009): International Finance and Growth in Developing Countries: What Have We Learned?, NBER Working Paper No , Obstfeld, Maurice, and Rogoff, Kenneth S. (2005): Global Current Account Imbalances and Exchange Rate Adjustments, Brookings Papers on Economic Activity, 2005(1), Tille, C., and E. van Wincoop (2010): A New Perspective on The New Rule of the Current Account, Journal of International Economics, vol. 80(1),