Shopping Day ITF-220: Economics of International Financial Policy
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Transcript of Shopping Day ITF-220: Economics of International Financial Policy
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– Comfort with quantitative thinking, esp. algebra
Topics covered in ITF220
I) ELASTICITIES & THE TRADE BALANCEII) THE KEYNESIAN MODEL OF INCOME
III) THE MONETARY APPROACH TO THE BALANCE OF PAYMENTS
IV) GLOBALIZATION OF FINANCIAL MARKETSV) FISCAL & MONETARY POLICY UNDER
INTERNATIONAL CAPITAL MOBILITYVI) INTERDEPENDENCE AND COORDINATIONVII) SUPPLY, INFLATION & MONETARY UNION
VIII) EXPECTATIONS, MONEY, & DETERMINATION OF THE EXCHANGE RATE
Professor Jeffrey Frankel, Kennedy School, Harvard University
Some illustrationsof international economic questions
that we study in ITF220
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Merchandise
G&S TB
CA balance
Why was the US trade balance on a downward trend, 1965-2011?
($ millions) ↑ Surplus↓ Deficit
Measures of external balance: United States
with a few improvements in 1990-91, 2001, & especially 2008-09?
Bussière, Callegari, Ghironi, Sestieri, & N.Yamano, 2013,"Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009."
Why did global trade collapsein the 2008-09 global recession?
(much more than usual)
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?
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and cheap in China?
Why did Emerging Markets plummet in May/June 2013
when Fed Chairman Bernanke talked of “tapering” QE?
8Financial Times, Dec. 15, 2013
Why did Mexico used
to suffer a currency crisis every
6 years?
Mexican inflation, 1970-2011
Changes in the $ value of the peso, 1970-2011
Hyperinflation:
Why did Zimbabwe’s inflation rate reach 2,600%
per month in mid-2008?