Unit Guide

General Information

Unit convenor and teaching staff	Unit convenor and teaching staff Unit Convenor Natalia Ponomareva natalia.ponomareva@mq.edu.au Contact via natalia.ponomareva@mq.edu.au E4A 428 Consultation time: Friday 3-4 or by appointment
Credit points	Credit points 3
Prerequisites	Prerequisites 6cp at 200 level including (ECON201 or ECON204)
Corequisites	Corequisites
Co-badged status	Co-badged status
Unit description	Unit description This unit studies macroeconomic theory and policy in a global context. It develops standard open economy macroeconomic models including: the Mundell-Fleming model; Dornbusch's overshooting model; and baseline intertemporal models. Exchange rate determination models are also analysed. These models are used to understand important issues in international macroeconomics including: the exchange rate; the current account; international capital mobility; exchange rate regimes; monetary unions and monetary and fiscal policies in open economies. Empirical evidence and policy issues are discussed where appropriate, using examples from both Australia and the rest of the world.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates

Learning Outcomes

On successful completion of this unit, you will be able to:

To understand and explain the assumptions and structure of standard theoretical models that form the body of modern international macroeconomics.
To apply these models and to interpret and analyse real problems in international macroeconomics.
To understand the associated empirical implications and important policy issues in the global economy.
To be intellectually ready to participate in public policy discussions arising in business and government environments.

Assessment Tasks

Name	Weighting	Due
Assignments	40%	TBA
Class Test	50%	Week 11
Class participation	5%	during the whole session
Online quizzes	5%	TBA

Assignments

Due: TBA
Weighting: 40%

Two assignments.

Submission

Online submission

Extension

25% mark deduction for each calendar day late.

On successful completion you will be able to:

To understand and explain the assumptions and structure of standard theoretical models that form the body of modern international macroeconomics.
To apply these models and to interpret and analyse real problems in international macroeconomics.
To understand the associated empirical implications and important policy issues in the global economy.
To be intellectually ready to participate in public policy discussions arising in business and government environments.

Class Test

Due: Week 11
Weighting: 50%

2-hour class test.

On successful completion you will be able to:

To understand and explain the assumptions and structure of standard theoretical models that form the body of modern international macroeconomics.
To apply these models and to interpret and analyse real problems in international macroeconomics.
To understand the associated empirical implications and important policy issues in the global economy.
To be intellectually ready to participate in public policy discussions arising in business and government environments.

Class participation

Due: during the whole session
Weighting: 5%

Active engagement in class discussions and online discussion is expected.

On successful completion you will be able to:

To understand and explain the assumptions and structure of standard theoretical models that form the body of modern international macroeconomics.
To apply these models and to interpret and analyse real problems in international macroeconomics.
To understand the associated empirical implications and important policy issues in the global economy.
To be intellectually ready to participate in public policy discussions arising in business and government environments.

Online quizzes

Due: TBA
Weighting: 5%

Two online quizzes.

On successful completion you will be able to:

To understand and explain the assumptions and structure of standard theoretical models that form the body of modern international macroeconomics.

Delivery and Resources

Classes

Lecture & Tutorial: Friday 12-3pm E6A 102 Theatrette. Some lectures will be delivered in online mode only.

The timetable for classes can be found on the University web site at: http://www.timetables.mq.edu.au/

Class attendance is only one part of university study. In addition to class attendance, students will need to spend around six hours per week in private study in order to perform well in this unit.

Required and Recommended Texts and/or Materials

Required Text:

* Krugman, P., M. Obstfeld, and M.J. Melitz (2012), International Economics: Theory and Policy, 9th ed., Global Edition, Pearson. (Hereafter referred to as KOM) The book is available for purchase at the Co-op Bookshop.

* Schmitt-Grohe S. and M. Uribe (2011), International Macroeconomics (Hereafter referred to as SGU). The text can be downloaded at http://www.econ.umn.edu/~deniz/teaching_spring2012/uribe-schmitt%20grohe-2011.pdf

Technology Used and Required

Unit Web Page

Course material as well as up to date information concerning any aspect of the unit, including any changes to the schedule, will be available to students by logging on to the learning management system (iLearn) that can be accessed via https://ilearn.mq.edu.au/login/MQ/

Assignment have to be submitted electronically through turnitin.

Learning and Teaching Strategies

This unit is taught as a mix of lectures and tutorials. Some lectures will be delivered in online format only. The lectures are designed to provide the tools which can then be applied in tutorials. Tutorial questions will be discussed in the third hour in some weeks where the lectures are shorter than others. Together with understanding lectures, practicing tutorial questions helps you to prepare for the quizzes, class test and assignments.

Changes since the last offering of this Unit

The weights of assessments were changed.
Class participation was added as an assessment.

Unit Schedule

Topics

Topic 1 Introduction; national income accounting and balance of payments; exchange rates and the foreign exchange market.

KOM Chs. 1, 13, 14

SGU Ch. 1

Topic 2 An asset approach to exchange rates; interest rates and exchange rates in monetary equilibrium.

KOM: Chs. 14, 15

Topic 3 Law of one price and PPP; a long-run exchange rate model.

KOM: Ch. 16

Topic 4 The Mundell-Fleming model under flexible exchange rates (AA-DD model), sticky prices.

KOM: Ch. 17

Topic 5 Fixed exchange rates and foreign exchange intervention; balance of payment crisis.

KOM: Ch. 18

J.E. Gagnon. 2013. Currency Wars Peterson Institute for International Economics. http://www.iie.com/publications/papers/gagnon201301.pdf

Topic 6 International monetary systems: a historical overview.

KOM: Ch. 19

R.N. Cooper. 1982. The Gold Standard: Historical Facts and Future Prospects. Brookings Papers on Economic Activity, Vol. 1982, No. 1, pp. 1-56.

J. Frankel. 1999. No Single Currency Regime is Right for All Countries or At All Times. Essays In International Finance, 205, Princeton http://www.princeton.edu/~ies/IES_Essays/E215.pdf

Topic 7 Current account determination in an endowment and a production economy; fiscal deficits.

KOM Ch.17 p 488-489

SGU Chs. 2-3

Topic 8 External adjustment in small and large economies. Fiscal deficits and current accounts.

SGU Chs. 4-5

Topic 9 Optimum Currency Areas and European experience.

KOM: Ch. 20

O. Blanchard. 2007. Adjustment within the Euro. The Difficult Case of Portugal. Portuguese Economic Journal, Vol. 6, No. 1, pp. 1-21

J. Williamson. 2005. A Currency Basket for East Asia, Not Just China. Peterson Institute for International Economics, Policy Brief 05-1 http://www.iie.com/publications/pb/pb05-1.pdf

A. Ubide 2013. Reengineering EMU for an Uncertain World. Peterson Institute for International Economics, Policy Brief 13-4 http://www.iie.com/publications/pb/pb13-4.pdf

Topic 10 Global capital markets; global imbalances, financial crises and reforms.

KO: Ch 21, 22

SGU: Ch 7

Blanchard, O. and G.M. Milesi-Ferretti (2009). Global Imbalances: In Midstream? IMF Staff Position Paper SPN/09/29, December 22, Washington, D.C. http://www.imf.org/external/pubs/ft/spn /2009/spn0929.pdf

M. Obstfeld and K. Rogoff. 2009. Global Imbalance and the financial crisis: Products of common causes. http://www.econ.berkeley.edu/~obstfeld/santabarbara.pdf

D. Rodrik. 1998 Who Needs Capital Account Liberalization? in Peter B. Kennen (ed.), Should the IMF Pursue Capital Account Convertibility? : Princeton University Press (1998). http://ksghome.harvard.edu/~drodrik/essay.P DF

P. Krugman. 1998. An Open Letter To Prime Minister Mahathir and his Slate piece on Capital Control Freaks http://web.mit.edu/krugman/www/mahathir.ht ml

P.B. Henry. 2003. Capital-account liberalization, the cost of capital, and economic growth. American Economic Review. Nashville: May.Vol.93, No. 2, pp 91- 96 https://facultygsb. stanford.edu/henry/Homepage/PDF/Liber alization.pdf

Policies and Procedures

Macquarie University policies and procedures are accessible from Policy Central. Students should be aware of the following policies in particular with regard to Learning and Teaching:

Academic Honesty Policy http://mq.edu.au/policy/docs/academic_honesty/policy.html

Assessment Policy http://mq.edu.au/policy/docs/assessment/policy.html

Grading Policy http://mq.edu.au/policy/docs/grading/policy.html

Grade Appeal Policy http://mq.edu.au/policy/docs/gradeappeal/policy.html

Grievance Management Policy http://mq.edu.au/policy/docs/grievance_management/policy.html

Disruption to Studies Policy http://www.mq.edu.au/policy/docs/disruption_studies/policy.html The Disruption to Studies Policy is effective from March 3 2014 and replaces the Special Consideration Policy.

In addition, a number of other policies can be found in the Learning and Teaching Category of Policy Central.

Student Code of Conduct

Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/support/student_conduct/

Results

Results shown in iLearn, or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au.

Academic Honesty

The nature of scholarly endeavour, dependent as it is on the work of others, binds all members of the University community to abide by the principles of academic honesty. Its fundamental principle is that all staff and students act with integrity in the creation, development, application and use of ideas and information. This means that:

all academic work claimed as original is the work of the author making the claim
all academic collaborations are acknowledged
academic work is not falsified in any way
when the ideas of others are used, these ideas are acknowledged appropriately.

Further information on the academic honesty can be found in the Macquarie University Academic Honesty Policy at http://www.mq.edu.au/policy/docs/academic_honesty/policy.html

Grades

Macquarie University uses the following grades in coursework units of study:

HD - High Distinction
D - Distinction
CR - Credit
P - Pass
F - Fail

Grade descriptors and other information concerning grading are contained in the Macquarie University Grading Policy which is available at:

http://www.mq.edu.au/policy/docs/grading/policy.html

Grading Appeals and Final Examination Script Viewing

If, at the conclusion of the unit, you have performed below expectations, and are considering lodging an appeal of grade and/or viewing your final exam script please refer to the following website which provides information about these processes and the cut off dates in the first instance. Please read the instructions provided concerning what constitutes a valid grounds for appeal before appealing your grade.

http://www.businessandeconomics.mq.edu.au/new_and_current_students/undergraduate_current_students/how_do_i/grade_appeals/

Special Consideration Policy

The University is committed to equity and fairness in all aspects of its learning and teaching. In stating this commitment, the University recognises that there may be circumstances where a student is prevented by unavoidable disruption from performing in accordance with their ability. A special consideration policy exists to support students who experience serious and unavoidable disruption such that they do not reach their usual demonstrated performance level. The policy is available at:

http://www.mq.edu.au/policy/docs/special_consideration/policy.html

Student Support

Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/

Learning Skills

Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to improve your marks and take control of your study.

Student Services and Support

Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.

Student Enquiries

For all student enquiries, visit Student Connect at ask.mq.edu.au

IT Help

For help with University computer systems and technology, visit http://informatics.mq.edu.au/help/.

When using the University's IT, you must adhere to the Acceptable Use Policy. The policy applies to all who connect to the MQ network including students.

Graduate Capabilities

Discipline Specific Knowledge and Skills

Our graduates will take with them the intellectual development, depth and breadth of knowledge, scholarly understanding, and specific subject content in their chosen fields to make them competent and confident in their subject or profession. They will be able to demonstrate, where relevant, professional technical competence and meet professional standards. They will be able to articulate the structure of knowledge of their discipline, be able to adapt discipline-specific knowledge to novel situations, and be able to contribute from their discipline to inter-disciplinary solutions to problems.

This graduate capability is supported by:

Learning outcomes

To understand and explain the assumptions and structure of standard theoretical models that form the body of modern international macroeconomics.
To apply these models and to interpret and analyse real problems in international macroeconomics.
To understand the associated empirical implications and important policy issues in the global economy.
To be intellectually ready to participate in public policy discussions arising in business and government environments.

Assessment tasks

Assignments
Class Test
Class participation
Online quizzes

Critical, Analytical and Integrative Thinking

We want our graduates to be capable of reasoning, questioning and analysing, and to integrate and synthesise learning and knowledge from a range of sources and environments; to be able to critique constraints, assumptions and limitations; to be able to think independently and systemically in relation to scholarly activity, in the workplace, and in the world. We want them to have a level of scientific and information technology literacy.

This graduate capability is supported by:

Learning outcomes

To understand and explain the assumptions and structure of standard theoretical models that form the body of modern international macroeconomics.
To understand the associated empirical implications and important policy issues in the global economy.
To be intellectually ready to participate in public policy discussions arising in business and government environments.

Assessment tasks

Assignments
Class Test

Problem Solving and Research Capability

Our graduates should be capable of researching; of analysing, and interpreting and assessing data and information in various forms; of drawing connections across fields of knowledge; and they should be able to relate their knowledge to complex situations at work or in the world, in order to diagnose and solve problems. We want them to have the confidence to take the initiative in doing so, within an awareness of their own limitations.

This graduate capability is supported by:

Learning outcomes

To understand and explain the assumptions and structure of standard theoretical models that form the body of modern international macroeconomics.
To apply these models and to interpret and analyse real problems in international macroeconomics.
To understand the associated empirical implications and important policy issues in the global economy.
To be intellectually ready to participate in public policy discussions arising in business and government environments.

Assessment tasks

Assignments
Class Test
Class participation

Effective Communication

We want to develop in our students the ability to communicate and convey their views in forms effective with different audiences. We want our graduates to take with them the capability to read, listen, question, gather and evaluate information resources in a variety of formats, assess, write clearly, speak effectively, and to use visual communication and communication technologies as appropriate.

This graduate capability is supported by:

Learning outcomes

To understand and explain the assumptions and structure of standard theoretical models that form the body of modern international macroeconomics.
To apply these models and to interpret and analyse real problems in international macroeconomics.
To understand the associated empirical implications and important policy issues in the global economy.
To be intellectually ready to participate in public policy discussions arising in business and government environments.

Assessment tasks

Assignments
Class Test
Class participation