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Shopping Day ITF-220: Economics of International Financial Policy. I.e., Open-economy macroeconomics Professor: Jeffrey Frankel Office hrs: Mon.4:15-5:15; Tues.2:00-3:00 . Pre-requisites: Introductory micro-economics Intermediate macro-economics
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Shopping Day ITF-220: Economics of International Financial Policy • I.e., Open-economy macroeconomics • Professor: JeffreyFrankelOffice hrs: Mon.4:15-5:15; Tues.2:00-3:00. • Pre-requisites: • Introductory micro-economics • Intermediate macro-economics • Comfort with quantitative thinking, esp. algebra
Topics covered in ITF220 I) ELASTICITIES & THE TRADE BALANCE II) THE KEYNESIAN MODEL OF INCOME • THE MONETARY APPROACH TO THE BALANCE OF PAYMENTS IV) GLOBALIZATION OF FINANCIAL MARKETS V) FISCAL & MONETARY POLICY UNDER INTERNATIONAL CAPITAL MOBILITY VI) INTERDEPENDENCE AND COORDINATION VII) SUPPLY, INFLATION & MONETARY UNION VIII) EXPECTATIONS, MONEY, & DETERMINATION OF THE EXCHANGE RATE Professor Jeffrey Frankel, Kennedy School, Harvard University
Some illustrations of internationaleconomicquestions that we study in ITF220
Why was the US trade balance on a downward trend, 1965-2011? ↑ Surplus ↓ Deficit with a few improvements in 1990-91, 2001, & especially 2008-09? Measures of external balance: United States ($ millions)
Why did global trade collapsein the 2008-09 global recession? (much more than usual) 2009 Bussière, Callegari, Ghironi, Sestieri, & N.Yamano, 2013,"Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009."
Has fiscal austerity helped, as a response to the euro crisis? Source: P.Krugman, 10 May 2012, via R.Portes, May 2013.
Why are MacDonald’s hamburgers expensive in Switzerland? andcheap in China?
Why did Emerging Markets plummet in May/June 2013when Fed Chairman Bernanke talked of “tapering” QE? Financial Times, Dec. 15, 2013
Mexican inflation, 1970-2011 Why did Mexico used to suffer a currency crisis every6 years? Changes in the $ value of the peso, 1970-2011
Hyperinflation:Why did Zimbabwe’s inflation rate reach 2,600% per month in mid-2008?