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(Click here for printable PDF Version) NBA 524; Credit: 3
(not open for audit)
Macroeconomics and International Trade
Tues & Thurs 14.55 – 16.10; Room: Sage
B06 Purpose of the Course
The purpose of the course is to provide
students with a knowledge of macroeconomics and international trade that
are closely linked with business decisions and other important issues in
the business world, e.g., what causes growth, recession, unemployment
and inflation, why and how exchange rate and stock market crises come
about, why countries trade, what do budget deficits and trade deficits
mean for export-import businesses, and what macro policies can be
anticipated based upon which business decisions are made, etc. The
course will help students understand and able to use tools of analyses
to better comprehend macroeconomic development and international trade
issues relevant to the business world. Practical questions raised in
each topic will focus on the link between macroeconomic-cum-trade
development/policies and the role and response of the business sector as
an economic agent. 1) National income accounting, balance-of-payment, and government budget 2) Inflation, unemployment and output: how business sector and the financial market react when interest rates change, and how producers or suppliers respond when prices and wages change. 3) Financial market, expectation, uncertainty, and policy credibility: how macroeconomic development and financial market interacts in an open economy, how the business sector anticipates monetary and fiscal policies, and why credibility matters. 4) Savings, investment, technology, and productivity: how productivity influences steady-state output, unemployment and how it interacts with the business’ long-run decisions.
1) Why countries trade, and why the patterns of trade have changed over the years: comparative advantage, increasing returns to scale, and intra-industry trade 2) Why regional trading agreements proliferate, and what are the costs and benefits of having such agreements 3) How do capital flows interact with macroeconomic development and exchange rate regimes, and what should the business sector anticipate given the huge size of current account deficits and capital inflows.
Evaluation is based on: (1) students’
participation in class debates and discussions: 10%; (2) a set of
home-works: 25%; (3) a mid-term exam: 25% and (4) a final exam: 40%.
Although there is only 10% weight for class participation, I should
caution that macroeconomics is cumulative; each topic is related to, or
built upon, what students have learned before. Hence, it is important
for students to keep up with the topics by attending every class meeting
and actively discussing the materials in the class. The main textbook is Macroeconomics by Oliver Blanchard (Prentice Hall). For international trade we will use International Economics: Theory and Policy by Paul Krugman & Maurice Obstfeld (Addison & Wesley). The book by Andrew B. Abel and Ben S. Bernanke Macroeconomics (Addison Wesley) is occasionally used for additional sources. For homework and exercise, students are expected to use actual economic and trade data of selected countries. We recommend the following publications: World Economic Outlook (WEO), published annually by the IMF; and International Financial Statistics (IFS), published quarterly also by the IMF. While IFS contains macroeconomic and financial data of all countries in the world, WEO contains both data series and macroeconomic analysis of different groups of countries. For U.S data, students can also look at the website of the Bureau of Economic Analysis: http://www.bea.doc.gov/.
The following are the topics to be
discussed week-by-week (notes: OB for Oliver Blanchard third edition; KO
for Krugman & Obstfeld fifth edition; and AB for Abel & Bernanke fifth
edition).
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