AECO 22A00 - International trade and finance

This course is an advanced-level undergraduate course covering international trade and as well as topics in international macroeconomics and finance. The course consists of two parts. The first part is an introduction to international trade. The main questions are “what determines trade flows across countries?” and “how does trade affect the economy?”. We will first discuss the historical and modern-day patterns of international trade, and the role of distance in driving trade flows. We then turn to productivity differences as the drivers of trade flows (Ricardian model), and differences in factor endowments (Heckscher-Ohlin). The latter allows us to take a first stab at how trade may be increasing inequality in an economy. We then study intra-industry trade, the role and incentives of firms in international trade, the firms' organization decisions. Finally, we study trade policy, and the some of the recent events in the global trade regime. In the second part, we will build towards an understanding of international financial flows and monetary policymaking in a global economy. We start with the measurement of financial flows in national accounts and the balance of payments, and with documenting the global imbalances. We then study how exchange rates are determined, and the conduct of monetary policy in an open economy. Finally, we talk about financial and currency crises. The course is suitable for students who have mastered the material of the first-year core course in economics and who have a strong interest in economics and economic policymaking, as well as a thorough background in mathematics and statistics. We will use formal models to derive our results, as well as draw on recent econometric studies to relate theories to the real world.

Johannes BOEHM,Victor SAINT-JEAN

English

Spring 2021-2022

To validate the course, the student is expected to pass the following assignments (at least three grades): 1°) 50% final exam 2°) 25% first take-home assignment (over course of one week) 3°) 25% second take-home assignment (over course of one week)

At the end of the course, the student is expected to : 1°) Have a thorough understanding of the most important theories and terminology of international trade and international macroeconomics 2°) Have a basic understanding of the empirical evidence for and against trade and open-economy macro theories 3°) Understand and can articulate the main considerations for and against trade and macroeconomic policy in open economies