GWU 2180 syllabus PDF

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THE GEORGE WASHINGTON UNIVERSITY Department of Economics Econ 2180: Survey of International Economics Professor Jay C. Shambaugh Office: Suite 502d, 1957 E St. Office hours: Monday 10-11 and Wednesday 10-11 ON BLACKBOARD Email: [email protected] Lecture: Monday/Wednesday 12:45-2:00 PM ON BLACKBOARD COURSE DESCRIPTION Economics 2180 is a one-semester international economics course that covers the basic concepts of international trade and international macroeconomics. The course is divided into two sections. The first half (lasting roughly seven weeks) will focus on international trade topics. These include: the effects of trade on an economy; models of trade based on technology, resources, or firms; the economic consequences of protectionism; and the institutional and legal structures of international trade in goods and services. The second half of the course (lasting for the balance of the semester) will involve international macroeconomic and finance issues. These include the determination of exchange rates, international capital flows, balance of payments accounts, macroeconomic policy in an open economy, fixed versus flexible exchange rate regimes, and financial crises. This is a challenging course. Students are advised to work hard from the start; cramming during the week before an exam has been a particularly unsuccessful strategy in my courses. Throughout the course, students will be required to use graphical and theoretical techniques to analyze economics issues. This means using supply and demand tools, production possibility frontiers, and simple macroeconomic models. Economics cannot be learned just by reading or listening. You need to engage the material (try practice problems, sketch models on paper, ask questions in class and section). This course is primarily designed for Elliott School undergraduate students seeking to satisfy their international economics requirement, though other students are certainly welcome. Economics majors should note that only two of the following courses may be counted towards the 2000-level economics course requirements (Econ 2180, 2181, and 2182). Learning objectives: Students will be able to use basic economic models to help understand the effects of international trade on a nation as well as the impact on individuals. Students will also be able to analyze the impact of various policies that governments use to influence the flow of goods across borders. Students will be able to use these models to understand the legal and institutional structures governing international trade flows. In the second half of the course, students will learn how foreign exchange markets work and be able to model the effects of governments letting their exchange rate float as well as the impact of fixing the exchange rate. Students also will be able to model the constraints that governments face when undertaking macroeconomic policy in a globalized world. 1

How Class Will Work….. Class will take place on Blackboard Collaborate. Classes will take place “live” at the scheduled time. I will keep an eye on the chat during the lecture and try to answer questions and sometimes ask questions to the group (and you can type answers into the chat). I may also try using the “poll” function to ask you questions to see where everyone is on a topic. I haven’t tried that yet and we’ll see how it goes. I recognize some of you are located in different time zones or may run into various challenges being on line at the appointed time. I will always record and post the lectures, and you will be able to find them on blackboard. I will also post the lecture slides that are used in class. Office hours will also be on blackboard collaborate. In general, they will be “open door”, meaning you can simply come into the room and start asking questions and others can observe the conversations. If people have private issues or issues with grading, we can also set up a time and I’ll learn how to make the room only open when I allow people in to guarantee privacy. This is all obviously not ideal. I wish we could be in one room. That being said, I did have some success with the same set-up last spring. I strongly encourage you to get into study groups (perhaps using the chat during your discussion sections to find people). It is much easier to learn this material when talking it through with others. As of now, I anticipate exams will be open book, but “timed” meaning you have to take the exam in a certain amount of time and return it back. The easiest way for that is if you are able to print it, write it out on paper, and scan it and return. I know not everyone has that setup. People also just filled in the exam on the pdf with a stylus or filled in text within a word doc and then added pictures. It is best to talk through that with your teaching assistants.

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Assignments and Grading: Problem Sets: 30% There will be 6 problem sets that need to be turned in. You may work in groups, but each student must turn in their own work in their own words. Midterm:

25% [10/19]

Final Exam:

40% [Date to be determined]

Reaction thoughts:

5%

A critical part of this class is remaining engaged throughout the course. In a large class, full participation is not practical. Normally, I use TurningPoint questions at the beginning of the class and sometimes during the class. That’s not feasible in the current setting. Instead, I will ask you to turn in up to 4 paragraph reaction papers to your teaching assistant. They are simply one paragraph with your reactions to either one of the outside readings or to the models we discussed in class THAT WEEK. That is, they are intended to encourage you to keep up with class and reading. You need to turn in 3 and are graded on the top 3 you turn in. You can turn in 4 (and replace a lower grade). They are not long essays. Really just one paragraph. Readings: The textbook for the course is Feenstra and Taylor, 2017, International Economics (4th ed). New York, Worth Publishers. There are other editions of the book available. I have tried to be clear what sections (not just page #s) are required to make it easier to use old editions, but older editions may lack some of the recent material. There are also a number of required readings from articles in journals, and popular press articles. These are posted on blackboard under “files.” Some articles from the popular press will be added throughout the semester as necessary. I will email you from the blackboard site if there are additional readings and post them there. (make sure you receive emails from blackboard) Recommended news sites: It will be useful to keep up with recent events. Reading the Economist, Financial Times, Wall Street Journal, or New York Times will help. Bloomberg’s website tracks economic news (http://www.bloomberg.com/news/economy/). Blogs like Calculated Risk and Free Exchange (at The Economist) can also help. (or you can follow me on Twitter @JayCShambaugh). Lastly, at the end of the class, you may want to listen to a podcast where I talked about a lot of the issues we cover (and many more) in the second half of the class. It is a “macromusings” podcast (here: https://soundcloud.com/macro-musings/shambaugh). On trade policy, Trade Talks is a great one to listen to. See list here: https://www.tradetalkspodcast.com/wp-content/uploads/2020/07/Trade-Talks-Catalog.pdf Episode 49 on quotas vs. tariffs fits in nicely with much of what we discuss. And episode 61 is quite good for firms and trade. Discussion Sections: TAs will review material from the class, go over problem sets, and review students for upcoming classes. Attending discussion sections is crucial to your success in this class.

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COURSE COMMUNICATION I am happy to see you during my regular online hours. If possible, I can meet you outside of the regular office hours but that depends on both students’ and my own schedules. You should also feel free to see your TA during their office hours and during discussion sections. Email is an effective way to ask and receive answers to very quick questions. It is NOT appropriate for time-sensitive or complicated issues. For example, do not send an email the day before a midterm asking for an explanation of the first problem set of a complicated point. GW Code of Academic Integrity Students should also be aware that academic integrity is a serious issue for this class. “ Academic dishonesty is defined as cheating of any kind, including misrepresenting one's own work, taking credit for the work of others without crediting them and without appropriate authorization, and the fabrication of information.” I take this seriously and will pursue any instances of academic dishonesty rigorously. See: http://www.gwu.edu/~ntegrity/code.html Grading problems Please report it in writing or in person to Professor Shambaugh, not to your TA. Please keep all graded material until the course grade is final in case there is a grading issue. Also, please alert me to any grading issues shortly after they are posted on Blackboard. UNIVERSITY SUPPORT OUTSIDE THE CLASSROOM DISABILITY SUPPORT SERVICES (DSS) 202-994-8250 Any student who may need an accommodation based on the potential impact of a disability should contact the Disability Support Services office at the Marvin Center Suite 242, to establish eligibility and to coordinate accommodations. For additional information please refer to: http://gwired.gwu.edu/dss/ UNIVERSITY COUNSELING CENTER (UCC) 202-994-5300 The University Counseling Center (UCC) offers 24/7 assistance and referral to address students' personal, social, career, and study skills problems. Refer to:  http://gwired.gwu.edu/counsel/CounselingServices/AcademicSupportService

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Course Outline: 1. Introduction and levels of income and growth (August 31, September 2) Readings:  Feenstra Taylor Chapter 1 pages 1-18 (Trade in the Global Economy, International Trade)  Feenstra Taylor Chapter 12 pages 423-7, 439-42 (The Global Macroeconomy, Foreign Exchange; and Government and Institutions)  Martin Wolf “Is unlimited growth a thing of the past”, Financial Times 10/2/12

2. Basic Models of Trade (Ricardo Model and Specific Factor Model) (September 9, 14, 16) Readings:  Feenstra Taylor Chapter 2 (Trade and Technology)  Feenstra Taylor Chapter 3 (Gains and Losses from Trade in Specific Factors Model)  “The Boomerang Effect,” The Economist, 4/21/12  “Some Win, Some Lose,” The Economist, 12/5/2001  “Winners and Losers,” The Economist, 2/28/08  “Trade in the Balance” The Economist, 2/6/16 First Problem Set on chapters 1-3 is due on 9/21

3. Trade and Resources (September 21, 23) Readings:  Feenstra Taylor Chapter 4 (The Heckscher Ohlin Model)  “Welcome Home,” The Economist, 1/19/13  “Here, There, and Everywhere,” The Economist, 1/19/13

4. Trade, imperfect competition, and firms (September 28 (some may spill into 9/30)) Readings:  Feenstra Taylor Chapter 6 (Increasing Returns) o skim section 4 (gravity equation)  Bernard, Jensen, Redding, and Schott, “Firms in International Trade” Journal of Economic Perspectives, Summer 2007. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.21.3.105  “Bringing Home the Bacon,” The Economist, 1/4/14 5

Second Problem Set on chapters 4 and 6 is due on 10/5

5. Tariffs and Quotas (September 30, and October 5, 7) Readings:  Feenstra Taylor Chapter 8 (Tariffs and Quotas)  Feenstra Taylor Chapter 9 (Tariffs and Quotas under Imperfect Competition)  “The Hidden Persuaders,” The Economist, 10/12/13  “Perverse Advantage,” The Economist, 4/27/13  “The Humble Hero,” The Economist, 5/18/13  “American steel tariffs cut both ways for domestic producers” The Economist 8/8/19

Third Problem Set on chapters 8-9 is due on October 12

6. Trade agreements and institutions (October 12, 14) Readings:  Feenstra Taylor Chapter 11 (International Agreements: Trade, Labor, Environment)  “Doha Delivers,” The Economist, 12/9/13  “All Change,” The Economist, 12/10/13  “It’s the End of the World…” The Economist 11/30/19  “Tearing up the Rule Book” The Economist 1/25/20  “Trade Truce” The Economist 12/21/19  “The Paris Agreement Summary” Climate Focus, December 2015

MIDTERM October 19th

7. Asset Trade, the Current Account, and the Balance of Payments (October 21, 26) Readings:  Feenstra and Taylor Chapter 16 (National Income and National Accounts)  The Economist, “Figures to Fret About,” 7/11/98

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 

Ghosh and Ramakrishnan, “Do Current Account Deficits Matter?” IMF Finance and Development 2006, http://www.imf.org/external/pubs/ft/fandd/2006/12/basics.htm Cavallo, Michele, “Exchange Rate Movements and the US International Balance Sheet,” FRBSF Economic Letter no. 2004-25, http://www.frbsf.org/publications/economics/letter/2004/el2004-25.pdf 8. Exchange Rates (October 28, November 2)

Readings:  Feensttra and Taylor Chapter 13 (Introduction to Exchange Rates)  “Gambling Against the Dollar” New York Times, 11/1/06  “What a Carry On” The Economist, 11/21/15

Problem Set 4 on Chapters 16 and 13 due on 11/9

9. Money Prices and the Long Run Exchange Rate (November 4, 9) Readings  Feenstra and Taylor chapter 14 (Exchange Rates 1: The Monetary Approach)  “Bags of Bricks” The Economist, 8/24/06  “In Dollars They Trust,” The Economist, 4/27/13  "Economic Scene: Why Is That Dollar Bill in Your Pocket Worth Anything" New York Times 1/15/04  “The Big Mac Index”, The Economist, 7/18/20  "Bunfight" The Economist, 2/2/13

10. Exchange Rate Determination (November 11, 16) Readings  Feenstra and Taylor chapter 15 stop at 563, (Exchange Rates II, The asset approach, stop at “The Trilemma”)  Feenstra and Taylor chapter 20 (Exchange Rate Crises), 778-82 (how pegs work)  "Intervention: divine or comic ?" p.89-90, The Economist, 9/23/00  "Divine Intervention" The Economist, 5/27/08  "Switzerland's buttoned down central bank bets it all" Wall Street Journal, 1/9/13  “Champs or chumps?” The Economist, 3/2/17 7

Problem Set 5 on Chapters 14 and 15 due on 11/23

11. Macroeconomics in the Open Economy (November 18, 23) Readings  Feenstra and Taylor, chapter 18 (Output, Exchange Rates, and Macro policies)  "Weaker Dollar Has Yet to Spur Boom…" New York Times, 8/21/02  "Currency winds hit home" Wall Street Journal, 12/4/12 12. Exchange Rate Regimes (November 30, December 2) Readings:  Feenstra and Taylor Chapter 15, pages 563-70 (The Trilemma)  Feenstra and Taylor Chapter 19 (Fixed vs. Floating) except 747-52 (liability dollarization)  Feenstra and Taylor Chapter 21 (The Euro) pages 830-41 (The economics of the euro)  “Currency Dilemmas” The Economist, p.90, 11/18/00  “What’s in a peg” The Economist, p.75, 11/2/02  “The Euro and its Troubles,” The Economist, p.69-70, 6/11/05

Problem Set 6 on Chapters 18 and 19 due on 12/11

13. Crises (December 7)        

Feenstra and Taylor Chapter 20 772-6 (facts about exchange rate crises) o The rest of chapter 20 is optional Feenstra and Taylor Chapter 19 747-52 (Liability Dollarization) Paul Krugman, “Crises” Nobel Prize Lecture: http://www.princeton.edu/~pkrugman/CRISES.pdf “Argentina on the Danube” The Economist, 2/19/09 “Wall Street on the Tundra,” Vanity Fair, April 2009 “Lender without limit” The Economist, 10/10/98 “Getting a Grip” The Economist, 12/1/12 “Resilient no more” The Economist, 3/14/20

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14. The Euro Crisis (December 9)      

Feenstra and Taylor Chapter 21, pages 851-70 (Eurozone Tensions & Eurozone in Crisis) Jay C. Shambaugh, The Euro's Three Crises, Brookings Papers on Economic Activity, Spring 2012. “Step by Step, with a Ripped Map” The Economist 12/14/12 “A Big Fiscal Deal” The Economist, 7/25/20 “Architectural Problem” The Economist, 11/23/19 “Hard Money” The Economist, 4/25/20

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