International Macroeconomics

ECO425 International Macroeconomics

Autumn 2018

Spring 2019
  • Topics

    This course offers covers a range of topics in international macroeconomics and international finance and monetary economics. The course covers theoretical models as well as empirical fact regarding topics such as current account dynamics, international relative prices, risk sharing in international financial markets, and international portfolio diversification. To relate the theoretical results we obtain to practical questions we will focus on the management of Norway's Government Pension Fund Global (the "Oil fund"). The course will also cover nominal vs. real exchange rates and the conduct of monetary policy and relations to financial markets. We will study the closed and open economy version of the model, which is a workhorse for most central banks. Understanding this model will help you to better understand (among others) Norges Bank's economic forecasts and interest rate decisions. This model describes well the economy during normal times, but was challenged during the recent financial crises. In the last lectures on the topic we will analyze how central banks modified their policy in reaction to the crises, how they coordinated internationally and what are the new challenges they are facing.

  • Learning outcome


    By the end of the course you will understand better how individuals and policymakers make optimal decisions in a dynamic environment where current decisions affect the future. Dynamics is present in everyday problems, like thinking about saving for the future, risk sharing, the dynamics of the current account, and monetary policy decisions. As the current financial crises showed, it is crucial that policymakers think about the dynamic impact of their decisions, and manage expectations about the future.


    You will get acquainted with what constitutes an economic theory, with special emphasis on how different theories fit the data. At the same time, you will learn the mathematical tools to analyze such problems.

    General Competence

    The course is an excellent opportunity for you to develop economic intuition and learn to relate newspaper articles to the topics covered in class. In general, you should leave us with  a good basis to formulate a topic for their MA thesis.

  • Teaching

    Lectures, Exercise classes deriving solutions to the problem sets.

    The students will receive regular assignments, will have TA sessions where they are explained how to solve these exercises, thus will receive a good preparation for the exam during the semester.

  • Recommended prerequisites

    This is an advanced course, that requires some foundations in macroeconomics and mathematical optimization. 

  • Requirements for course approval

    Mandatory assignments, approved/not approved

    (Assignments are graded, need to achieve 60% for approval)

  • Assessment

    4 hour written School exam.

  • Grading Scale

    Grading scale A - F.

  • Literature

    Obstfeld and Rogoff, Foundations of International Macroeconomics, MIT Press. 

    Additional readings from articles, book chapters and research papers will be collected in course readings package.


ECTS Credits
Teaching language


Course responsible

Krisztina Molnar and NN, Department of Economics.