Rutgers University

Department of Economics
Fall 2013

Econ336 - International Balance of Payments

Instructor: Antonio Cusato Novelli
Email: acusato@econ.rutgers.edu
Class Location: CAC SC-101
Session Dates: Sep 4 - Dec 11
Class Time: M,W 4:30-5:50 PM
Office: NJ Hall 408, CAC
Office Hours: T 9:30-10:30 AM or by appointment
Prerequisites: Intermediate Macroeconomics (321) and Econometrics (322)

Learning Outcomes
This course is an introduction to the main problems and methods in the field of International Macroeconomics and Finance. Main topics include the determination of current accounts, exchange rate
theory and evidence, financial crises, and macroeconomic policy in open economies. We will discuss
some basic theories that have been developed to understand these issues, review related empirical
evidence, and identify implications for current events and public policy.
This course is a upper level elective.

Course Materials
The textbook is: Robert Feenstra and Alan Taylor (2012) International Macroeconomics. Worth
Publishers. Second Edition. ISBN-10: 1-4292-4103-9
To discuss current account issues in more detail, we will also rely on an unpublished textbook, International Macroeconomics, by Stephanie Schmitt Grohe and Martin Uribe. The text is still a work
in progress. The link is the following: http://www.columbia.edu/ mu2166/UIM/notes.pdf. Also, the
chapters we will discuss in class will be posted on Sakai.

Academic Integrity and Grading Policy

Students are expected to mantain Academic Integrity1 . Cheating in an exam will be reported
and considered as a serious violation.
Students with disabilities must present a letter from the RU Office of Disability Services before
the first quiz.
Students are expected to attend all classes. If you expect to miss one or two classes because of illness or a family emergency, please use the University absence reporting website
https://sims.rutgers.edu/ssra/ to indicate the date and reason for your absence. An email is
automatically sent to me.
1

http://academicintegrity.rutgers.edu/about-the-office-of-student-conduct

Rutgers University - Deparment of Economics

Econ336 - International Balance of Payments - Fall 2013

During the semester, there will be 3 quizzes, one midterm and one final. The lowest quiz grade
will not be considered for the calculation of your final quiz grade (only the other two). The final
exam will not be cumulative.
There will be one make-up exam at the end of the course. Students are allow to take this exam
under extraordinary circumstances. This make-up exam will be cumulative.
The following table consider important dates and events:
Dates
Sep 25
Oct 9
Oct 21
Oct 28
Nov 27
Dec 17, 8-11AM

Event
Quiz 1
Quiz 2
Midterm
Last day to drop with W
Quiz 3
Final exam

Note that October 28 is the last day to drop with a W grade.

The material that will be evaluated on quizzes and exams will be posted on the Announcements
section of the Sakai site.
Course grade will be based on 2 quizzes (30 per cent), 1 midterm exam (35 per cent) and 1 final
exam (35 per cent).

Course Outline
The following course outline could be subject to changes.
Lecture
I. Introduction
II. Exchange Rates and the Foreign Exchange Market
III. A Model for Exchange Rates: the Long Run Monetary
Approach and the Short Run Asset Approach
IV. Introduction to the National Income Accounting
and the Balance of Payments
V. A Theory of Current Account Determination
VI. Current Account Determination: a Production Economy
VII. Current Account Determination: External Adjustment and
Fiscal Policy
VIII. Short Run Issues and Macroeconomic Policies
IX. Exchange Rates Regimes and Crises
X. Debt and Default

Materials
Feenstra and Taylor (2012), Ch. 1
Feenstra and Taylor (2012), Ch. 2
Feenstra and Taylor (2012), Ch. 3, 4
Feenstra and Taylor (2012), Ch. 5
Schmitt Grohe and Uribe (2013), Ch.
Schmitt Grohe and Uribe (2013), Ch.
Feenstra and Taylor (2012), Ch. 6
Schmitt Grohe and Uribe (2013), Ch.
Schmitt Grohe and Uribe (2013), Ch.
Feenstra and Taylor (2012), Ch. 7
Feenstra and Taylor (2012), Ch. 8, 9
Feenstra and Taylor (2012), Ch. 11

1, 2
3, 4
5
6, 7