SYLLABUS: INTERNATIONAL ECONOMICS - ECON-AD 103 Credit Hours: 4 Lectures: This is a 14-week course with two classes (1hr 15 min each) per week Instructor: Professor Samreen Malik E-mail: [email protected] Office hours: Tuesday (2.00 – 5.00) or by appointment. GAF Information: Charles Soll ([email protected]) Office hours: GAF will announce the office hours at a later date. REQUIRED TEXT: Robert C. Feenstra and Alan M. Taylor, “International Economics”, Worth 2008. OTHER READINGS: You re highly encouraged to also use the following resources; the Economist, the Financial Times and the Wall Street Journal; for additional articles and readings. RECOMMENDED READINGS: Textbook: Paul Krugman and Maurice Obstfeld: “International Economics: Theory & Policy”, 8 th edition, Addison Wesley NOTE ON COURSE MATERIAL: The course materials will primarily be based on the Text book (relevant chapters). However, as you will see in the outline, project report, presentation and participations during the presentation counts as much as the mid-term exam for the final grade evaluation. The project will be tested on numerous criterions that reflect your understanding of International Economics. For more details of the project, see the document for project detail.

PREREQUISITES The prerequisite for this course at NYUAD are Principles of Microeconomics and Principles of Macroeconomic. It will also be assumed that students are reasonably familiar with basic mathematical tools, graphics and simple statistics. No other prior knowledge will be assumed. COURSE DESCRIPTION This course is an introduction to international economics. It will introduce students to important

theories in the analysis of international trade and international macroeconomics and finance which will help students in understanding events in the world economy and related policy issues. This course consists of two parts: (1) International Trade and (2) International Macroeconomics and Finance. In the first part of the course, we will study international trade in goods and services. We will determine various economic forces that shape patterns of trade. We will investigate why economies trade, what products they trade, who trades them, at what price and quantities they trade, and study some of the benefits and costs of trade. In addition, a significant part of the course will also cover various policies that governments use to shape trade patterns among countries, and the reasons for implementing such policies. In the second part of the course, we will study international macroeconomics and finance which is devoted to the study of large scale economic problems in interdependent economies. Samreen Malik

Page 1

SYLLABUS: INTERNATIONAL ECONOMICS - ECON-AD 103 Specifically, we will study the economic linkages in terms of currencies, trade and capital flows between different economies. The main issues we study include: Foreign exchange markets, balance of payments, capital flows, financial crises, as well as the coordination of monetary and fiscal policies in a global economy. Note: This class is not aimed to provide practical experience of trading in the financial industry. You should think of this course as merely a first stepping stone in the field of finance that will allow you to understand the basics of the financial markets. ASSESSMENT The grading will be based on three parts: Homework exercises Midterm Exam Project

20% 40% 40%

Homework exercises: There will be 4 homework exercises (First three homework will be regular homework while the fourth one will be the sample midterm), each counting for 5% of the final grade. The due date for each assignment is provided in the mini schedule section of this document. If you miss class, you are responsible for finding out about any important announcements in class and changes in assignments. Failure to attend class is NOT an excuse for turning in assignments late. Late assignments will not be accepted. Exams: There is one midterm (written) exam, which is scheduled on 10th October, 2013. The written section of the project will be due on the last day of class. There is no final exam for this class. Exams are closed-book and other aids, including any notes, electronic or paper dictionaries, should not be used. Cell phones cannot be used as calculators and must be turned off and kept out of sight during all exams. The mid-term will cover all the material covered prior to the mid-term exam day. Project: A detailed outline of the project with the grading scheme is provided separately. Please refer to that document for deadlines and general outline of the project. Grading: Grades A AB+ B BC+ C CD F Samreen Malik

Marks 95-100 90-94 85-89 80-84 75-79 70-74 65-69 60-64 50-59 Below 50 Page 2

SYLLABUS: INTERNATIONAL ECONOMICS - ECON-AD 103 Late Homework and Exam Absence Late homework will not be accepted under any circumstance. The home works will be online way in advance and therefore no excuse will be accepted for late home works. You must check the NYU class for any due dates regularly. However, the due dates are also provided in the mini schedule. There is no make-up examination for the midterm. If you cannot make it to the midterm due to clashes with other class times or exams, you should not take my class. In case you have booked plane tickets for the Fall break that clashes with the mid-term exam, please do not take this class. Any requests to reschedule the exam will not be entertained. Exception: In extreme cases (personal or medical emergencies, in which case the student must provide a written excuse signed by a doctor, parent, or university official) that presses you to miss the mid-term exam, a make-up midterm will be provided. Re-grading Any homework/exam for which there is a re-grade request must be done within seven days after I return the exam to you. The request for re-grade must be in writing and attached to the exam when submitting the exam for a re-grade. The request must include a description of what the problem is and why you think the exam should be graded differently. PARTICIPATION AND ATTENDANCE POLICIES Participation Students are responsible for attending all class meetings, participating responsibly in class discussions and completing all class assignments. Specifically, students should try their best: i) to come to class on time ii) to refrain from packing up belongings before class ends iii) not to make noises that might create a disruption in class (e.g., keep your cell phone in vibration mode or turn it off) iv) to give attention while either instructor or another student is speaking Code of Conduct Cheating will be taken very seriously. You are responsible to follow all the relevant policies by the University or Faculty/Department. Communication I will be happy to answer questions on the course material by email. Please indicate the course name in the subject line. In case, I feel that email is not the best mode to explain your problem; I will be happy to set a separate appointment so that you may come to discuss the related questions. Occasionally, I will post some of the questions received—with my answer—on the course website. Hopefully, this will be an efficient way to disseminate information. Student identifiers will be removed if I post a question (if you do not want your question posted, just say so in your email.) The outline provided is tentative and subject to change at the instructor’s discretion.

Samreen Malik

Page 3

SYLLABUS: INTERNATIONAL ECONOMICS - ECON-AD 103 COURSE OUTLINE (Subject to changes as we go along) Week

Date

Lecture

Topic

CH

Week 1

27-Aug

Lecture 1

Trade in the Global Economy

1

29-Aug

Lecture 2

Trade and Technology The Ricardian Model (I)

2

3-Sep

Lecture 3

Trade and Technology The Ricardian Model (II)

2

5-Sep

Lecture 4

Gains and Losses from Trade in the Specific-Factors Model

3

10-Sep

Lecture 5

Gains and Losses from Trade in the Specific-Factors Model

3

12-Sep

Lecture 6

Trade and Resources The Heckscher-Ohlin Model

4

17-Sep

Lecture 7

Trade and Resources The Heckscher-Ohlin Model

4

19-Sep

Lecture 8

Movement of Labor and Capital Between Countries

5

24-Sep

Lecture 9

Movement of Labor and Capital Between Countries

5

26-Sep

Lecture 10

Trade Policy under Perfect Competition

8

1-Oct

Lecture 11

Trade Policy under Perfect Competition

8

3-Oct

Lecture 12

Trade Policy under Perfect Competition

8

8-Oct

Lecture 13

Practice exam discussed Mid-term discussion

9

10-Oct

Lecture 14

Mid-term exam

11

22-Oct

Lecture 15

The Global Macroeconomy (Background reading) & Exchange Rates and the Foreign Exchange Market

24-Oct

Lecture 16

Exchange Rates I The Monetary Approach in the Long Run

12 & 13 14

29-Oct

Lecture 17

Exchange Rates I The Monetary Approach in the Long Run

14

31-Oct

Lecture 18

Exchange Rates II The Asset Approach in the Short Run

15

7-Nov

Lecture 19

Exchange Rates II The Asset Approach in the Short Run

15

12-Nov

Lecture 20

National and International Accounts Income/Wealth/Balance of Payments

16

14-Nov

Lecture 21

Balance of Payments I Gains from Financial Globalization

17

19-Nov

Lecture 22

Balance of Payments I Gains from Financial Globalization

17

21-Nov

Lecture 23

18

26-Nov

Lecture 24

28-Nov

Lecture 25

Balance of Payment II Output, Exchange Rates, and Macro Policies Balance of Payment II Output, Exchange Rates, and Macro Policies Presentation 1 and 2

3-Dec

Lecture 26

Presentation 3 and 4

10-Dec

Lecture 27

Presentation 5 and 6

12-Dec

Lecture 28

PROJECT DUE

Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Week 9

Week 10

Week 11 Week 12

Week 13 Week 14

Samreen Malik

18

Page 4

SYLLABUS: INTERNATIONAL ECONOMICS - ECON-AD 103

Date

Lecture

Mini Schedule

Assignment/Project Online/Due

Assignment/Project Online/Due

(1) Questions to be answered in International trade course. 8/27/2013

1 (2) Terminology (3) Some useful measures (1) Absolute and Comparative Advantage (a) Marginal Product of Labor (3) Production Possibility Frontier

8/29/2013

2

(4) Opportunity cost (5) Indifference curve (6) Wages (7) Comparative Adv. (eg) and Absolute Adv. (eg.) (1)International Trade Equilibrium (a) Production and consumption

9/3/2013

3

(b) World price line (c )Wages (d) International pricing (e) Terms of Trade (1) What we learnt in Ricardian Model (a) Specific Factor Model (b) Setting (i) Country (ii) Input and diminishing returns

9/5/2013

4

(iii) PPF (iv) Opportunity cost and price (V) Foreign country

(1) Gains from Trade (a) Wages 9/10/2013

5

(i) Change in relative prices

Assignment 1 Online (5%)

(ii) Earnings of capital and land

Samreen Malik

Page 5

SYLLABUS: INTERNATIONAL ECONOMICS - ECON-AD 103 (1) Setting (a) PPF (b)Indifference curve 9/12/2013

6

(2) No-trade equilibrium (d)Price and Quantity (3) Free trade equilibrium & Hecksher Ohlin theorem (1) Effects of trade on factor price (2) Stolper Samuelsson Theorem

9/17/2013

7

9/19/2013

8

(3) Leontief Paradox (If time)

Assignment 1 Due

(1) Movement of labor between countries (2)Movement of capital between countries (1) Movement of capital between countries

9/24/2013

9

(2) Gains from labor and capital movement

(1) Gains from Trade (a) Import tariff (small country) 9/26/2013

10 (b) Import tariff (large country)

10/1/2013

11

Assignment 2 Online (5%)

(1) Import quotas (small country) (2) Introduction to subsidies

(1) Export Subsidy (small and large country) 10/3/2013

12

(2) Production subsidy

Assignment 2 Due

(3) High Tech Export

10/8/2013

Samreen Malik

13

Solve sample Mid-term

Sample Midterm Online (5%)

Assignment 3:

Page 6

SYLLABUS: INTERNATIONAL ECONOMICS - ECON-AD 103 Sample Midterm Due

10/10/2013

14

Mid Tem Exam (40%) (1) Exchange rate essentials

10/22/2013

15

(a) ER practices (b) Market for Foreign Exchange (c) Arbitrage and IR (1)ER and prices in the LR

10/24/2013

16

(2) Money, prices and ER in the LR

Assignment 4 Online (5%)

(3) Monetary Approach (1) Money, Interest and Prices in LR 10/29/2013

17 (2) Monetary Regime and ER Regime (1) ER and Interest rates in the short run: UIP and FX market equilibrium

10/31/2013

11/7/2013

18

19

(2) Interest rates in SR: Money Market Equilibrium (3) Asset Approach (1) A complete theory: Unifying Monetary and Asset approach

Project Online

Assignment 4 Due

(2) Fixed ER and Trilema (1) Measuring macro-economic activity 11/12/2013

11/14/2013

20

21

(2) Income, product and expenditure (3) Balance of Payment (1) Limit on how much a country can borrow (LR Budget constraint) (2) Consumption smoothing (1) Gains from efficient investment

11/19/2013

22 (2) Gains from diversification of risk (1) Demand in the open economy

11/21/2013

23

11/26/2013

24

(2) Goods Mkt. Eq. (3) Good and Forex Mkt. Equilibrium (4) Money Mkt. Eq. (1) Short run: IS-LM-FX Model (2) Stabilization policy (3) Evaluation (if time permits)

Samreen Malik

Page 7

SYLLABUS: INTERNATIONAL ECONOMICS - ECON-AD 103 11/28/2013

25

Presentation 1 and 2 (10%)

Attendance and Class Participation (5%)

12/3/2013

26

Presentation 3 and 4 (10%)

Attendance and Class Participation (5%)

12/10/2013

27

Presentation 5 and 6 (10%)

Attendance and Class Participation (5%)

12/12/2013

28

PROJECT DUE

Samreen Malik

Project Report (25%) Due

Attendance and Class Participation (5%)

Page 8