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Course 2020-2021 a.y.


Department of Economics

Course taught in English

Go to class group/s: 31

CLEAM (6 credits - II sem. - OP  |  SECS-P/01) - CLEF (6 credits - II sem. - OP  |  SECS-P/01) - WBB (6 credits - II sem. - OP  |  SECS-P/01) - BIEF (6 credits - II sem. - OP  |  SECS-P/01) - BIEM (6 credits - II sem. - OP  |  SECS-P/01) - BIG (6 credits - II sem. - OP  |  SECS-P/01) - BEMACS (6 credits - II sem. - OP  |  SECS-P/01)
Course Director:

Classes: 31 (II sem.)

Suggested background knowledge

At least one course of macroeconomics is strongly recommended. The maths requirement are limited. You will need to know some elementary consumption and production theory, be able to do some elementary differentiation, and know some elementary statistics. I will also assume that you have taken at least one full course specifically on macroeconomics, and hopefully two.

Mission & Content Summary

This is a course on international economics. It deals with many aspects of the economic interactions between countries. Unlike the other course I teach, “Monetary and fiscal policy: current challenges”, it is more advanced and more grounded in theory. However, it is not purely theoretical: all topics are illustrated by real life applications and recent examples from different countries. Particularly in the second part, the course also focuses on policies, in particular the implications of different monetary and fiscal policies in open economies. I will use a very recent textbook, International Macroeconomics, by Stefanie Schmitt-Grohe, Martin Uribe and Michael Woodford, all at Columbia University. This textbook is available for free on the website of the authors at and is being updated constantly. One very nice feature of the book is that it presents all topics in a two-period model, which avoids the complications of infinite horizon models but conveys all the relevant intuition (and in most cases better than an infinite horizon model).


1.       Global imbalances and balance of payment accounting.

2.       Current account sustainability. Savings, Investment, and the current account.

3.       An intertemporal theory of the current account. The response of the current account to temporary and permanent shocks in an optimizing framework.

4.       Terms of trade, terms of trade shocks and the current account.

5.       The current account  and the response to productivity shocks in a production economy.

6.       Uncertainty and the current account. The Great Moderation and global imbalances.

7.       Large open economies. The transmission of shocks to and from large open economies. The “global savings glut hypothesis”.

8.       The real exchange rate. Purchasing power parity. Nontradable goods and deviation from PPP.

9.       What determines the real exchange rate? The effects of demand and supply factors in the short and long run. Sudden stops: Argentina in 2001 and Iceland in 2008.

10.   International capital market integration. Covered and uncovered interest parity conditions.

11.   Capital controls and their macroeconomic effects

12.   Monetary policy and nominal exchange rates under fixed and flexible exchange rates.

13.   Nominal rigidities and the effects of monetary policy in an open economy. The European recession of 2008-2011

14.   Fiscal policy in an open economy. Ricardian Equivalence and the twin deficits.

15.   External debt. The debt crisis of developing countries in the eighties. The debt overhang problem. Debt reduction schemes.

Intended Learning Outcomes (ILO)
At the end of the course student will be able to...

The student will acquire knowledge and understanding of the main iusses in international macroeconomics, both the theory and the main policy issues.

At the end of the course student will be able to...

The student will be able to better understand the  debate on international macroeconomic issues

Teaching methods
  • Face-to-face lectures
  • Online lectures
  • Individual assignments

Face to face lectures are standard. Online lecture will occur as long as the administration deems it necessary in view of the Covid-19 situation. Online lectures will be live, and also recorded and uploaded. Active participation in both types of lectures is encouraged. Individual assignments will be problem sets with solutions.

Assessment methods
  Continuous assessment Partial exams General exam
  • Written individual exam (traditional/online)
  •     x

    The exam will consists of "True, false or uncertain" questions and of brief essays. More details will be given in class and during the course. Sample exams from the past will be provided. 

    Teaching materials

    Handouts written by the instructor are posted online before each lecture.

    Last change 13/12/2020 18:57