1

Economics 183�Topics in International Economics Professor Barry Eichengreen Spring 2007

Office hours: Wednesday 2:00-4:00 p.m. Email capple@econ.berkeley.edu to make an appointment.

SYLLABUS AND READING LIST

Economics 183 is an advanced undergraduate seminar in international economics intended for students who have previously taken Economics 181 and 182 and/or have the consent of the instructor. The course is designed to introduce a selection of current policy issues in international economics and to provide an opportunity for students to apply models to which they have been exposed in previous work. The grade for this course will be based equally on four components: a class presentation, three weekly papers, a literature review, and a term paper. Presentation. Each student, individually or as part of a team, will take charge of a week and its topic. His/her presentation should be discussed with the instructor, during his office hours prior to presentation. It will be graded on the basis of how well the student defines the question posed in the articles assigned for the week, presents and analyzes the competing points of view, and guides classroom discussion. Weekly Papers. The second component of the grade will be based on three weekly papers. Each student will pick three assigned topics, and for each write a three-page overview. The three-page paper must be turned in at the beginning of the relevant class meeting. The goal of the paper should be to state as clearly as possible the key question posed by the readings for the week, summarize and critique the authors� views on the question, and state the student�s own position on the controversy. Literature Review. The third component of the grade will be a 10-page literature review due in week 8 of the course. The student is expected to take one of the weekly topics and read more broadly (that is, to read more than simply the assigned items for that week). Using those additional readings, he/she should then attempt to provide a more complete and convincing answer to the question posed by the week�s required readings. Clarity of exposition will count toward the grade. Term Paper. In lieu of a final exam, students will turn one of their literature reviews into a 20 page term paper, due one week following the final class meeting. Whereas the literature review simply surveys and synthesizes the views of others, the term paper should have an original research component.

2

The weights for the grade will be 25 percent literature review, 25 percent classroom presentation, 25 percent for the three weekly papers, and 25 percent term paper. In addition, students are expected to contribute to classroom discussion; informed contributions will be counted as extra credit toward the student�s grade. Most of the links below can be found through http://sunsite2.berkeley.edu:8000/ on campus computers only. ===============================================================

READING LIST January 16. Introduction January 23. Global Imbalances Menzie D. Chinn (2005), �Getting Serious About the Twin Deficits,� Council Special Report Number 10, New York: Council on Foreign Relations, (September), http://wage.wisc.edu/uploads/News/Twin_DeficitsTF.pdf Barry Eichengreen (2006), �Global Imbalances: The Blind Men and the Elephant,� Brookings Policy Brief 1, (January) http://www.brookings.edu/views/papers/200601_iiep_eichengreen.pdf Yin-Wong Cheung, Menzie Chinn and Eiji Fujii (2006), �The Overvaluation of Yen Undervaluation,� unpublished manuscript, University of Wisconsin, Madison, (September), http://emlab.berkeley.edu/users/webfac/eichengreen/e183_sp07/e183.shtml January 30. The Management of Foreign Exchange Reserves Joshua Aizenman and Jaewoo Lee (2006), �Financial versus Monetary Mercantilism: A Long Run View of International Reserve Hoarding,� unpublished manuscript, University of California, Santa Cruz, (September), http://emlab.berkeley.edu/users/webfac/eichengreen/e183_sp07/e183.shtml Dani Rodrik (2006), �The Social Cost of Foreign Exchange Reserves,� (January), http://papers.nber.org/papers/w11952. Lawrence Summers (2006), �Reflections on Global Current Account Balances and Reserve Accumulation,� speech to the Reserve Bank of India, Mumbai, (24 March), http://www.rbi.org.in/scripts/PublicationsView.aspx?Id=8304 Y.Y. Reddy (2006), �Foreign Exchange Reserves: New Realities, New Options,� (September), http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=300

3

February 6. Reassessing Financial Globalization M. Ahyan Kose et al. (2006), �Financial Globalization: A Reappraisal,� unpublished manuscript, International Monetary Fund, (February), http://www.imf.org/external/pubs/cat/longres.cfm?sk=19435 Sebnem Kalemli-Ozcan, Laura Alfaro, and Vadim Volosovich (2005), �Why Doesn�t Capital Flow from Rich to Poor Countries?� NBER Working Paper no. 11901, http://papers.nber.org/papers/w11901. Raguhram Rajan (2006), �Foreign Capital and Economic Growth,� unpublished manuscript, International Monetary Fund, (August), http://www.kansascityfed.org/publicat/Sympos/2006/pdf/PrasadRajanSubramanian.0811.pdf February 13. Emerging Market Risks World Bank (2005), �Global Imbalances and Emerging Market Economies,� in World Bank, Global Development Finance, Washington, D.C.: The World Bank, pp. 51-64, http://siteresources.worldbank.org/INTGDF2005/Resources/gdf05_ch3.pdf Barry Eichengreen and Yung Chul Park (2006), �Global Imbalances and Emerging Markets,� unpublished manuscript, University of California, Berkeley, http://www.iwep.org.cn/web/20060911/Global%20Imbalances%20and%20Emerging%20Markets%20%20%20Barry%20Eichengreen,%20Yung%20Chul%20Park.pdf Guillermo Calvo and Ernesto Talvi (2006), �The Resolution of Global Imbalances: Soft Landing in the North, Sudden Stop in Emerging Markets?� unpublished manuscript, University of Maryland and Interamerican Development Bank, (August), http://www.sciencedirect.com/science/article/B6V82-4KPGNS8-5/2/349cb03de1ae57a5342f4005cf75c6df February 20. Reforming the International Monetary Fund Edwin Truman (2006), �Overview on IMF Reform,� in Reforming the IMF for the 21st Century, Washington, D.C.: Institute for International Economics, Chapter 2, pp. 31-126, http://www.iie.com/publications/chapters_preview/3870/02iie3870.pdf Mervyn King (2006), �Reform of the International Monetary Fund,� (February), http://www.bankofengland.co.uk/publications/speeches/2006/speech267.pdf International Monetary Fund (2006), Interim Report of the Managing Director on Reform of the International Monetary Fund, (20 April), http://www.imf.org/external/np/pp/eng/2006/042006.pdf

4

February 27. Reforming the World Bank Center for Global Development (2006), Rescuing the World Bank, Washington, D.C.:, http://www.cgdev.org/content/publications/detail/9957 March 6. Inflation and Globalization Kenneth Rogoff (2006), �Impact of Globalization on Monetary Policy,� paper presented to the annual Jackson Hole symposium of the Federal Reserve Bank of Kansas City, (August), http://www.kc.frb.org/PUBLICAT/SYMPOS/2006/pdf/rogoff.paper.0829.pdf Claudio Borio and Andrew Filardo (2006), �Globalization and Inflation: New Cross-Country Evidence,� unpublished manuscript, Bank for International Settlements, (September), http://emlab.berkeley.edu/users/webfac/eichengreen/e183_sp07/e183.shtml Thomas Helbing et al.,(2006), �How Has Globalization Affected Inflation?� World Economic Outlook, Chapter 3, Washington, D.C.: IMF, (April), http://www.imf.org/external/pubs/ft/weo/2006/01/pdf/c3.pdf March 13. Outsourcing Richard Freeman (2006), �The Great Doubling: The Challenge of the New Global Labor Market,� unpublished manuscript, Harvard University, (August), http://emlab.berkeley.edu/users/webfac/eichengreen/e183_sp07/e183.shtml Richard Baldwin (2006), �Globalisation: The Great Unbundling(s),� Economic Council of Finland, Prime Minister�s Office, (20 September), http://www.vnk.fi/hankkeet/talousneuvosto/tyo-kokoukset/globalisaatioselvitys-9-2006/artikkelit/Baldwin_06-09-20.pdf Catherine Mann (2005), �This is Bangalore Calling: Hang Up or Speed Dial: What Technology-Enabled International Trade in Services Implies for the U.S. Economy,� manuscript, Institute for International Economics, (January), http://www.iie.com/publications/papers/mann0105.pdf Alan Blinder (2006), �Offshoring: The Next Industrial Revolution?� Foreign Affairs 85, pp. 113-128, http://www.internationaltraderelations.com/Blinder.Offshoring%20(Foreign%20Affairs,%20March-April%202006).pdf

5

March 20. Europe and the Euro: Doomed to Fail? Philip R. Lane (2006), �The Real Effects of EMU,� IIIS Discussion Paper no. 115 (January), http://www.tcd.ie/iiis/documents/discussion/pdfs/iiisdp115.pdf Paul De Grauwe (2006), �What Have We Learnt about Monetary Union since the Maastricht Treaty?� unpublished manuscript, Catholic University of Louvain, (January), http://www.blackwell-synergy.com/doi/pdf/10.1111/j.1468-5965.2006.00659.x?cookieSet=1 Paul De Grauwe (2006), �On Monetary and Political Union,� unpublished manuscript, Catholic University of Louvain, (May), http://www.financesinternationales.sciences-po.fr/seminaire_conf/article_paul_de_grauwe.pdf Olivier Blanchard (2006), �An Economic Survey of Europe,� unpublished manuscript, MIT (September), http://econ-www.mit.edu/faculty/download_pdf.php?id=1392 April 3. U.S. and European Employment and Productivity Growth Compared Olivier Blanchard (2004), �The Economic Future of Europe,� Journal of Economic Perspectives 18, pp. 3-26, http://papers.nber.org/papers/w10310.pdf Edward Prescott (2003), �Why do Americans Work So Much More than Europeans?� Federal Reserve Bank of Minneapolis Research Staff Report 321, (November), http://www.minneapolisfed.org/research/qr/qr2811.pdf Alberto Alesina, Alberto, Edward Glaeser and Bruce Sacerdote (2005), �Work and Leisure in the U.S. and Europe: Why So Different?� NBER Working Paper no. 11278, (April), http://papers.nber.org/papers/w11278 April 10. Challenges to Chinese Growth OECD (2005), �Key Challenges for the Chinese Economy,� in OECD Economic Surveys: China, Chapter 1, pp. 27-69, (September), http://puck.sourceoecd.org/vl=3504129/cl=15/nw=1/rpsv/cgi-bin/fulltextew.pl?prpsv=/ij/oecdjournals/03766438/v2005n13/s1/p1l.idx Edwin Lim, Michael Spence and Ricardo Hausmann (2006), �China and the Global Economy: Medium Term Issues and Options � A Synthesis Report,� Working Paper no. 126, Center for International Development, Harvard University, (June), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=902379

6

April 17. Challenges to Indian Growth Dani Rodrik and Arvind Subramanian (2004), �From Hindu Growth to Productivity Surge: The Mystery of the Indian Growth Transformation,� IMF Working Paper no. 04/77, (May), http://www.imf.org/external/pubs/cat/longres.cfm?sk=17313 Abhijit Banerjee and Lakshmi Iyer (2005), �History, Institutions and Economic Performance: The Legacy of Colonial Land Tenure Systems in India,� American Economic Review 95: 4 (September), pp. 1190-1213, http://globetrotter.berkeley.edu/macarthur/inequality/papers/BanerjeeLandTen.pdf Kalpana Kochhar, Utsav Kumar, Raghuram Rajan and Arvind Subramanian (2006), �India�s Pattern of Development: What Happened, and What Follows?� NBER Working Paper no 12023, (February), http://papers.nber.org/papers/w12023 April 24. How Will the World Adapt to China and India? L. Alan Winters and Yusuf Shahid (2006), �Introduction,� in World Bank, Dancing with Giants: China, India and the Global Economy, Washington, D.C.: The World Bank, pp. 1-26, http://siteresources.worldbank.org/INTCHIINDGLOECO/Resources/CE_Ch01pp.001-026_FINAL.pdf Yusuf Shahid, Kaoru Nabashima and Dwight Perkins (2006), �China and India Reshape the Global Industrial Geography,� in World Bank, Dancing with Giants: China, India and the Global Economy, Washington, D.C.: The World Bank, pp. 27-56, http://siteresources.worldbank.org/INTCHIINDGLOECO/Resources/CE_Ch02pp.027-56_FINAL.pdf Barry Eichengreen and Hui Tong (2006), �How China is Reorganizing the World Economy,� Asian Economic Policy Review 1, pp.73-101, http://www.aeaweb.org/annual_mtg_papers/2006/0106_1430_1702.pdf May 1. Why Doesn�t South Africa Grow Faster? Dani Rodrik (2006), �Understanding South Africa�s Economic Puzzles,� Working Paper no. 130, Center for International Development, Harvard University (August), http://www.polity.org.za/pdf/HarCID130.pdf Ricardo Hausmann and Bailey Klinger (2006), �South Africa�s Export Predicament,� Working Paper no. 129, Center for International Development, Harvard University, (August), http://cfapp1-docs-public.undp.org/eo/evaldocs1/sfcle/eo_doc_567062840.pdf

7

May 8. Why Doesn�t Latin America Grow Faster? William Easterly, Norman Loayza and Peter Monitiel (1997), �Has Latin America�s Post-Reform Growth Been Disappointing?� Journal of International Economics 43, pp. 387-408, http://www.worldbank.org/html/dec/Publications/Workpapers/WPS1700series/wps1708/wps1708.pdf Eduardo Fernandez-Arias and Peter Montiel (1997), �Reform and Growth in Latin America: All Pain and No Gain?� Working Paper no. 351, Washington, D.C.: Interamerican Development Bank (June), http://www.williams.edu/Economics/wp/Montielreformandgrowth.pdf Ricardo Hausmann and Andres Velasco (2005), �Slow Growth in Latin America: Common Outcomes, Common Causes?� unpublished manuscript, Harvard University, http://ksghome.harvard.edu/~rhausma/docs/slowgrowth_salamanca_0510.pdf