ECO425 International Macroeconomics
Autumn 2019Spring 2020
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.
Through the topics of International Economics you will
- understand how individuals and policy makers make optimal decisions in a dynamic environment
- learn how current decisions affect the future
- understand how policymakers manage expectations As the current financial crises have shown, it is crucial that policymakers and individuals think about the dynamic impact of their decisions , and especially monetary policymakers take management of expectations about the future very seriously. For an individual, dynamics is present in everyday problems, like thinking about saving for the future, risk sharing.
You will learn
- to develop an economic model
- to compare calibrated models to the data
- to optimize with mathematical methods to analyze problems.
The course is a great opportunity for you to
- develop economic intuition
- learn to relate newspaper articles to the topics covered in class
- learn how to formulate a research idea for your MA thesis
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.
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)
4 hour written School exam.
Grading scale A - F.
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
Spring. Offered spring 2019.
Krisztina Molnar (Economics Department, NHH) and Håkon Tretvoll (Statistics Norway)