Spring 2025 - ECON 842 G100
International Monetary Economics (4)
Class Number: 2504
Delivery Method: In Person
Overview
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Course Times + Location:
Jan 6 – Apr 9, 2025: Tue, 9:30 a.m.–12:20 p.m.
Burnaby
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Instructor:
Minjie Deng
minjied@sfu.ca
Description
CALENDAR DESCRIPTION:
International finance and open-economy macroeconomics, including theories of current account dynamics and international capital flows, open-economy business cycle, international trade and exchange rate, financial crisis and sovereign default.
COURSE DETAILS:
This is a graduate-level course, designed to provide students with a comprehensive
understanding of the key concept, theories, and policy issues related to international
finance. The course focuses on introducing key concepts and theories in international
finance, such as current account, net international investment position, terms of trade, trade
balance, tariffs, uncertainty, exchange rate, purchasing power parity, international capital
market integration, and capital controls. The course also aims to familiarize students with
how to conduct research in international finance and work on original research questions
that they are interested in pursuing in their PhD or MA thesis.
COURSE-LEVEL EDUCATIONAL GOALS:
Tentative Course Schedule:
Week 1 (Jan 7): International Capital Flows
- Introduction
- Current account and trade balance
- Net international investment position
Week 2 (Jan 14): Current Account and Great Moderation
- An intertemporal model of the current account
- Response of the trade balance and the current account to a variety of economic shocks
- Great moderation
Week 3 (Jan 21): Terms of Trade and Tariffs
- Effects of terms-of-trade shocks
- Effects of interest rate shocks
- Effects of import tariffs
Week 4 (Jan 28): Current Account in Production Economy
- Effects of interest rate on investment
- Investment, saving, current account schedule
- Event application (giant oil discoveries)
Week 5 (Feb 4): no class
Week 6 (Feb 11): Uncertainty
- Uncertainty and precautionary saving
- Incomplete asset markets
Week 7 (Feb 25): International Transmission
- International transmission of country-specific shocks
- How large economies affect small economies
Week 8 (March 4): Real Exchange Rate and Purchasing Power Parity
- The law of one price
- Purchasing power parity
- Real exchange rate, home bias
Week 9 (March 11): International Capital Market Integration
- Interest rate differentials
- Covered interest rate parity
- Uncovered interest rate parity
Week 10 (March 18): Capital Controls
- Effects of capital controls
Week 11 (March 25): Open-book Midterm Exam
Week 12 (April 1): Research question presentations
Week 13 (April 8): Paper presentations
April 15: research proposal due
Grading
- Open-book midterm exam: March 25 30%
- Research question presentation 20%
- Paper presentation 20%
- Research proposal 30%
NOTES:
- Midterm exam: Students will have an in-class midterm exam after all lectures have been covered.
- Research question presentation: Students will present original research questions they are interested in pursuing for their PhD or MA thesis. During this presentation, students should outline their research question, explain their motivation for exploring it, provide a brief literature review, and discuss potential methods to address the question. I will offer comments and feedback on your presentation and research idea. Your research question presentation will form the basis of the research proposal.
- Paper presentation: You will be expected to present a paper that is already published in an economics journal. The purpose of this assignment is to help you develop a deeper understanding of what constitutes a mature and well-executed economics paper. Your presentation should cover the paper’s research question, motivation, theoretical framework (if applicable), empirical strategy or methodology (if applicable), key findings, and contributions to the literature. Even better, you could critically assess the paper’s strengths and limitations and discuss any potential extensions or open questions it raises. This exercise will not only familiarize you with high-quality research but also provide insights into how to structure your own work effectively.
- Research proposal: The research proposal is intended to provide a detailed written plan for conducting a research study. Your proposal must include the following components: motivation, research question, a detailed review of the relevant literature, highlighting gaps that your research will fill and explaining how your work contributes to the existing body of knowledge, discuss the method you plan to use. The proposal should outline a project that has the potential to be expanded into a thesis paper.
Materials
REQUIRED READING:
Course materials:
All course materials and communication will be Canvas.
Textbooks are not required but list here as references for students who are interested.
1. Uribe and Stephanie Schmitt-Grohe, Princeton University Press, 2017, “Open economy
macroeconomics”. 2. Stephanie Schmitt-Grohé, Martín Uribe, and Michael Woodford, 2-
22, “International Macroeconomics: A Modern Approach”
REQUIRED READING NOTES:
Your personalized Course Material list, including digital and physical textbooks, are available through the SFU Bookstore website by simply entering your Computing ID at: shop.sfu.ca/course-materials/my-personalized-course-materials.
Graduate Studies Notes:
Important dates and deadlines for graduate students are found here: http://www.sfu.ca/dean-gradstudies/current/important_dates/guidelines.html. The deadline to drop a course with a 100% refund is the end of week 2. The deadline to drop with no notation on your transcript is the end of week 3.
Registrar Notes:
ACADEMIC INTEGRITY: YOUR WORK, YOUR SUCCESS
SFU’s Academic Integrity website http://www.sfu.ca/students/academicintegrity.html is filled with information on what is meant by academic dishonesty, where you can find resources to help with your studies and the consequences of cheating. Check out the site for more information and videos that help explain the issues in plain English.
Each student is responsible for his or her conduct as it affects the university community. Academic dishonesty, in whatever form, is ultimately destructive of the values of the university. Furthermore, it is unfair and discouraging to the majority of students who pursue their studies honestly. Scholarly integrity is required of all members of the university. http://www.sfu.ca/policies/gazette/student/s10-01.html
RELIGIOUS ACCOMMODATION
Students with a faith background who may need accommodations during the term are encouraged to assess their needs as soon as possible and review the Multifaith religious accommodations website. The page outlines ways they begin working toward an accommodation and ensure solutions can be reached in a timely fashion.