PMTOEM Theory of Open Economy_M

Faculty of Economics and Administration
Autumn 2008
Extent and Intensity
2/0. 3 credit(s). Type of Completion: zk (examination).
Teacher(s)
Ing. Miroslav Hloušek, Ph.D. (lecturer)
Guaranteed by
prof. Ing. Osvald Vašíček, CSc.
Department of Economics – Faculty of Economics and Administration
Contact Person: Lydie Pravdová
Timetable
Tue 7:40–9:15 S311
Course Enrolment Limitations
The course is also offered to the students of the fields other than those the course is directly associated with.
fields of study / plans the course is directly associated with
Course objectives
Main objective of the course is to provide standard analytical tool for analyzing of economic equilibrium and effects of policymakers' decisions or various types of exogenous shocks in the framework of open economy.
Students should be able to:
understand intertemporal approach to current account;
analyse advantages of international borrowing/lending in comparison with autarky (in small open economy);
calculate current account deficit/surplus in the model framework (analytically, numerically);
evaluate influences of output growth or government spending on current account (temporary vs. permanent);
understand extension of the model by investment and its influence on current account;
analyze mutual interaction of economies in two-country framework (with and without investment);
distinguish effects of international borrowing/lending in two-country framework and in small open economy;
formulate arguments in favor of and against to opening of labor market (international mobility);
distinguish price determinants of real and nominal exchange rate;
interpret real appreciation that occurs in transition countries;
explain asset approach to nominal exchange rate ;
use (uncovered) interest rate parity condition for determination of exchange rate changes;
estimate risk premium from the data;
calculate deviation from covered interest parity condition;
understand introducing of money in the model;
analyze impacts of money growth on real and nominal variables;
Syllabus
  • 1. Derivation of static modeling framework of open economy.
  • 2. Comparative analysis of static equilibria.
  • 3. Model of small open economy with investment.
  • 4. Two-Region world economy.
  • 5. Two-country model with investment.
  • 6. Taxation of foreign borrowing and lending.
  • 7. International labor movements.
  • 8. Analysis of the real exchange rate.
  • 9. Analysis of nominal exchange rate.
  • 10. Monetary policy in open economy (introducing money into the model).
  • 11. Applications (interest rate disparity, Dornbusch overshooting model).
Literature
  • OBSTFELD, M. and K. ROGOFF. Foundations of International Macroeconomics. The MIT Press, 1996. info
  • KRUGMAN, Paul R. and Maurice OBSTFELD. International economics : theory and policy. 5th ed. Reading: Addison-Wesley, 2000, xxx, 750. ISBN 032107727X. info
Assessment methods
Semester paper (write a report based on an article), written examination
Language of instruction
Czech
Further Comments
Study Materials
The course is taught annually.
Teacher's information
http://www.econ.muni.cz/~hlousek/teaching/toe.html
The course is also listed under the following terms Autumn 2007.
  • Enrolment Statistics (recent)
  • Permalink: https://is.muni.cz/course/econ/autumn2008/PMTOEM