International Finance, 362, Fall 2007.

Christiano

Miscellaneous Notes:

· Apart from the three exceptions listed below, lectures are MW 12:30-1:50am, 102 University Hall.

· My office number is 3246, Arthur Andersen Hall; Phone: 491-8231. Email: l-christiano@northwestern.edu. Office hours: Mondays, 2-3pm.

· Teaching assistant: Cosmin Ilut (c-ilut@northwestern.edu), room 3250. Office hours - 5:30-6:30pm, Monday.

· The grades will be determined as follows: weekly homeworks, 15%; midterm, 35%; final, 50%. Homeworks will be distributed on or before Wednesday of each week, and will be due on Wednesday of the following week, in the mail box of Cosmin Ilut in the economics department office.

· Homeworks should be done in groups of 4 or less.

· The midterm is on Monday, October 15. The final is on Monday, December 10, 3-5pm in the lecture room.

· The October 17, November 5 and November 26 lectures will be presented during recitation on October 26, November 2 and November 16, respectively. The October 17, November 5 and November 26 lecture times will be taken by recitation.

· The textbook for the course is:
     Paul Krugman and Maurice Obstfeld (KO), International Economics, Theory and Policy, Addison-Wesley, seventh edition, 2006.

· Handouts and other readings will be distributed from time to time. They will be put on this web site (see below), and students are responsible for checking it regularly.

· You will get more out of this course if you read the financial press regularly. Also, there is a lot of relevant information on the Web, and I encourage you to look through it. Here is a small sampling of the economic commentary and data that you can find there. The best general commentary is available from the Economist Magazine. See also the New York Times. Brad DeLong’s web site, http://www.j-bradford-delong.net/ . Speeches of Federal Reserve governors. Also, Dave Altig’s blog is a great read, and it provides links to lots of other interesting web blogs

· Various current articles will be placed here (here are articles and more articles from previous years).

· Exams

Goals.

This course will develop a framework useful for understanding financial flows in the international economy. We will use the framework to understand a number of issues that are of current interest. Perhaps the top international financial issue of our time is the huge United States current account deficit. What does it mean? Why is it happening? Does it pose risks for the US and/or the world economy? Other issues of interest in international finance are the financial crises experienced by nearly 10 emerging market economies in the past decade. These countries experienced between a 7 and 10 percent fall in aggregate output within a year. Understanding what makes an economy vulnerable to an international financial crisis is important if we want to make sure that it does not happen again. We will ask whether alternative exchange rate regimes or dollarization may be helpful. We will ask whether the International Monetary Fund (IMF) and other international financial organizations are part of the solution or part of the problem. We will discuss the debate that raged between the IMF and the World Bank over the proper response by the monetary authority to a financial crisis: should it raise or should it reduce interest rates? Other questions that we will investigate include the reasons, and prospects for, the monetary unification in Europe. We will also investigate various puzzles associated with exchange rates, including the reasons for their apparent excessive volatility.

Lectures: We will cover chapters 12-20 in KO..

Homeworks:

Hmk #1: questions 1, 2, 3, 5, page 303 in KO.

Economic Data:

	Nice overview of main aggregate US time series, but not easily downloaded - Economic Report of the President
	Fabulous, downloadable source of US data: Federal Reserve Bank of St Louis
	Lot's of great charts from Dr. Yardeni
	Particularly good for Historical Data - National Bureau of Economic Research
	Downloadable source of US National Income and Product data, in many cases going back to 1929 - Bureau of Economic Analysis
	Data on Assets and Liabilities of Various Sectors of the Economy, not convenient for downloading: Flow of Funds Accounts
	Data From the Bureau of the Census.
	European Data: Eurostat
	Tons of data for lots of countries: economagic
	Bureau of Labor Statistics
	Other data (including international data)