Focuses on the international dimension of macroeconomic policy, particularly monetary, fiscal, and exchange rate policy, and on the determination of the current account balance, national income, and inflation. Special attention is given to developing countries and other small open economies, defined as those for whom prices are determined on world markets. Models of devaluation include those that focus on the price of internationally traded goods in terms of non-traded goods. A major overall theme is the implication of increased integration of global financial markets. Another is countries' choice of monetary regime, especially the degree of exchange rate flexibility and alternative ways that central banks can credibly commit to anchor inflation expectations. Implications of commodity price swings and financial crises in emerging markets will both be covered.
This course is designed for MPA/ID students and is open to non-MPA/ID students by permission of instructor only. Proficiency in calculus essential.