International Economics: Finance
Instructor |
Teaching Assistant |
|---|---|
Professor Alan G. Isaac |
Matthew Templeton |
Office: Zoom classroom (via Canvas) |
Office: Zoom |
Office Hours: W 8am-12pm; by appointment |
Hours: T 10am-noon |
Email: aisaac@american.edu |
Email: mt9306a@student.american.edu |
Econ 672 Overview
Course Objective
This course focuses on open economy macroeconomics and especially exchange rate economics. The course objective is to develop a “tool kit” of common approaches to the macroeconomics of open economies, so that actual policy questions can be approached with theoretical flexibility and economic insight.
Learning Outcomes
Students who master the material will be able to understand and solve problems related to the following.
discuss growth theory in an international setting.
comparative static and comparative dynamic macroeconomic analysis of the open economy.
the functioning of spot and forward markets for foreign exchange.
models of expectations formation, with an emphasis on implications for exchange rate behavior.
the overshooting and portfolio-balance models of exchange rate determination.
the effects of devaluation and commercial policies on output, inflation, and the balance of payments.
General Organization
The course begins with a review of the Solow growth model and some extensions, which will provide background for student presentations on growth and the distribution of income. The course then considers models of flexible exchange rates. The second half of the semester focuses on modeling the role of capital flows, expectations formation, and attitudes toward risk in the determination of flexible exchange rates. These concepts support the subsequent analysis of macroeconomic policy under fixed exchange rates. The interests of the class can dictate the depth of coverage of individual topics as well as the overall pace of the course, so be sure to speak up!
Key Course Documents
See Canvas for the key course documents. Find grading details below.
Course Policies
Communication
This class will use Canvas. Look there for the syllabus, lecture notes, and assignments. Canvas announcements are sent by email; students must monitor these announcements and Canvas Conversaions (Inbox). Students should also subscribe to the Canvas Discussions. In online interactions, all students are expected to adhere to basic etiquette: be respectful, and quote appropriately.
Classroom Policies (IRW)
The following policies apply to in-person meetings only.
- Masks:
All students must wear masks in the classroom. Please choose a good quality mask (e.g., KN95) and ensure that it fits correctly. In a classroom is big enough and well ventilated, and in compliance with university guidelines, I may occasionally lecture without a mask. Please let me know if you prefer that I do not. I will certainly stay masked in this case.
- Connected devices:
As a courtesy to other students, do not browse the web or check your email during class. Such activities distract others and reduce your ability to contribute to discussions. In addition, there is evidence that students believe themselves capable of productive multitasking but in fact are not (May and Elder, 2018).
- Cell phones:
Please silence your phone before entering the classroom. (E.g., put it on vibrate, or turn it off.) Place it out of sight in a pocket or bag (and not on your desk). If you need to make or take a call, you may quietly leave the classroom. (Please sit near the door if you anticipate such a need.)
- Computers:
You may use a computer to take notes or do other course-relevant activity. However, be aware that research indicates that using a computer to take notes can hinder learning (Sana, Weston, Cepeda 2013). This appears to be due to the distraction of multitasking.
Attendance Policy
I do not grade lecture attendance. However, this course is not textbook based, and you are responsible on exams for the material covered in class. Additionally, every student is expected to be present for every student presentation. Attendance of the student presentations is an obligation not just a courtesy; it is graded.
Course Prerequisites
Macroeconomic Theory (Econ-601 or Econ-802) and Mathematical Economics (Econ-605 or Econ-705) are prerequisite to this course. No exceptions.
Some introduction to econometrics (e.g., Econ-623) is recommended but is not required. Also, I recommend that you read an undergraduate test on international finance during the first week of class (e.g., [Krugman.Obstfeld.Melitz-2018-PrenticeHall]). Recommended texts are on reserve but their online availability is limited; inexpensive used copies are available on EBay. (Older editions are fine.) Historically, students who omit this background reading early in the course have trouble later.
Software
There is no required software for this course. However, I occasionally use Mathematica in the classroom for demonstration purposes. If you would like to replicate these demonstrations, please install Mathematica. (American University has a site license.) I also discuss the estimation of some of the models we consider. If you would like to attempt to replicate these estimates, please install your favorite statistical software.
Input on Teaching
Near the end of the course, you will have the opportunity to evaluate this class and your learning experience by completing an Input on Teaching from Students (ITS) survey. You are strongly encouraged to fully participate in the ITS process. I especially appreciate written comments that help me to improve and strengthen this course.
Assessment and Grading
Assessment
Mastery of the student learning outcomes (see above) is assessed by means of and ungraded class participation, graded exams, and a presentation.
Class Participation
Participation during my lectures is assessed but not graded. This just means that I'll be checking on the adequacy of your understanding during lecture, so that I can discover opportunities to enrich your understanding of the material. Participation during student presentations is graded. You must prepare questions and participate in discussion, as described below.
Exams
Exams are taken without the aid of textbooks or of notes of any kind. Naturally, no collaboration is allowed on exams. I offer no extra credit, and there will be no makeup exams. (Missing an exam due to unavoidable contingencies, such as illness or family emergencies, can be excused by the Dean of Students. Your grade will then be calculated from the remaining exams.)
Exams presume a thorough knowledge of the lecture material and all required readings.
MIDTERM EXAMINATION: 1 March 2022
FINAL EXAMINATION: you will find the date of our final examination on the final exam schedule. (The AU schedule of classes always determines the date and time of the final, so please check your schedule of classes.)
Grading
Final grades are based on the total points earned. (See below.) There is no “extra credit”. Whole grade numerical cut-off points are 90% for As and 80% for Bs. It follows that in principle everyone can attain an A, if every student makes an extraordinary effort.
Additionally, I shift grades upwards when needed to achieve an acceptable distribution. Specifically, if fewer than 15% of the class reaches the 90% cutoff, I shift the grades upwards to ensure at least 15% of the grades are A or A-.
Points
Nominal points earned are weighted to produce a weighted total. (E.g., scores on a final examination that lists 100 points worth of problems will be weighted by 1.35.) Relative points (after reweighting) are earned as follows:
midterm exam (110 weighted points possible)
cumulative final exam (135 weighted points possible)
30 minute paper presentation (30 weighted points possible)
quality of questions submitted to paper presenters (15 weighted points possible)
There will be one 30 minute student presentation per week, starting early in the semester. (There will be no presentation on the midterm or final dates.) Sign up early if you care about your presentation date; first come first served. In week 2, I will assign dates to those who do not request one. Presentation expectations are summarized on the homework page.
Topics and Readings
The primary text for this course will be my online notes. In addition I will at times refer to reading in [Mark-2001-Blackwell], which I recommend but do not require. (Please do not be intimidated by the Mark text: some parts Mark's text are quite difficult, but those parts will not be required!)
I have also requested that a number of books be available on reserve in the University Library. These are recommended reading only if you are interested in pursuing specific topics beyond the scope of this course.
The reading list below is intended to introduce you to some core topics and recent work in several areas of International Monetary Economics. It is by no means meant to be exhaustive nor to discourage additional reading. The number of classes designated below for each topic is intended only as a very rough guide: class interest and preparation will determine how quickly we proceed through the topics.
Background
Required readings for the student presentations are on the syllabus supplement. Some classes are entirely notes based and have no required readings. These often list entirely optional recommended readings.
Class 1: Macroeconomic Accounting (NIPA Review)
- Macroeconomic Accounting
posted notes
- The Income Implications of Rising U.S. International Liabilities
- Beyond GDP? Welfare across Countries and Time
Recommended Additional Reading:
- Global Imbalances or Bad Accounting? The Missing Dark Matter in the Wealth of Nations
Class 1: Review of the Solow Growth Model
- A Contribution to the Theory of Economic Growth
[Solow-1956-QJE] introduces the classic exogenous growth model.
Class 2: Solow Growth Model: Steady-State Comparative Statics
Recommended Additional Reading:
- A Model of Economic Growth
Class 2: Golden Rule
Recommended Additional Reading:
- A Neo-Classical Theorem
- Second Essay on the Golden Rule of Accumulation
- A Mathematical Theory of Saving
Class 3: Solow Model Empirics
- A Contribution to the Empirics of Economic Growth (first part)
[Mankiw.Romer.Weil-1992-QJE] Illustrates how to bring the traditional neoclassical growth model to the data.
Class 3: Dynamic Adjustment in the Solow Model
Recommended Additional Reading
- Fiscal Policy in a Neo-Classical Growth Model: An Analysis of the Time Required for Equilibrating Adjustment
Class 4: Human Capital
- A Contribution to the Empirics of Economic Growth
[Mankiw.Romer.Weil-1992-QJE] explores the empirical consequences of extending the Solow model to encompass a concept human capital.
Recommended Additional Reading:
- Making a Miracle
[Lucas-1993-Econometrica] shows how learning by doing is affected by international trade.
- Catching Up and Falling Behind
[Stokey-2015-JEGrowth] explores the importance of technology inflows.
Class 5: Approaches to Growth
- The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital
The Foreign Exchange Market I: Exchange Rate Regimes and International Trade
Class 5: FX Market
Recommended Reading:
- “Under the Microscope: The Structure of the Foreign Exchange Market”
Class 6: Covered and Uncovered Interest Parity
- “Uncovered Interest Parity”
PhD Students:
- “Exchange Rates and Interest Parity”
Recommended Reading:
- “The Dollar, Bank Leverage, and Deviations from Covered Interest Parity”
Money and Prices
Class 6: Classical Model of the Price Level and Inflation
- “Some Monetary Facts”
[McCandless.Weber-1995-FRBMQR] http://www.minneapolisfed.org/research/QR/QR1931.pdf
- “Liquidity: Meaning, Measurement, Management”
[Lucas-2014-FRBSLR] https://research.stlouisfed.org/publications/review/2014/09/15/liquidity-meaning-measurement-management/
PhD Students:
- “Microfoundations of Money: Why They Matter”
[Waller-2015-FRBSLR] https://research.stlouisfed.org/publications/review/2015/12/07/microfoundations-of-money-why-they-matter/
Recommended Additional Reading:
- Long-run Money Demand Redux
Luca Benati, Robert Lucas, Juan Pablo Nicolini, Warren E. Weber, 11 March 2017, https://voxeu.org/article/long-run-money-demand-redux
Aslo: see the extra readings on money and inflation.
Flexible Exchange Rates I: Macroeconomic Adjustment in Equilibrium Models
Class 7: Crude Monetary Approach
PhD Students:
- “The Behavior Of Money And Other Economic Variables: Two Natural Experiments”
Recommended: see the extra readings on monetary-approach models.
Class 7: Monetary Approach and Expectations
- “A Monetary Approach to the Exchange Rate: Doctrinal Aspects and Empirical Evidence”
[Frenkel-1976-ScanJE] is the classic article on the German hyperinflation.
PhD Students:
- “Testing the Monetary Model of Exchange Rate Determination: New Evidence from a Century of Data”
MAFER and Rational Expectations
Class 9–10: More Monetary Approaches to Floating Exchange Rates
- “Exchange Rates In The Modern Floating Era: What Do We Really Know?”
Recommended Additional Reading:
- International Macroeconomics and Finance, Chapter 3
[Mark-2001-Blackwell] offers a good introduction to the monetary approach.
- Can Central Banks Go Broke?
Class 10: MAFER under Rational Expectations
- Monetary Approach under Rational Expectations
Lecture Notes
PhD Students:
- Rational Expectations and Monetary Models of Exchange Rate Determination: An Empirical Examination
[Hoffman.Schlagenhauf-1983-JME] is the classic estimation of monetary approach under RatEx.
Class 11: Portfolio Balance Model
- Portfolio Balance Models
Lecture Notes
PhD Students:
- “Exchange Rates and the Current Account”
- “International Investors, the U.S. Current Account and the Dollar”
Recommended: see the extra readings on portfolio-balance models.
The Real Exchange Rate
Class 12: Purchasing Power Parity
- For Here or To Go? Purchasing Power Parity and the Big Mac
[Pakko.Pollard-1996-FRBSLR] is the classic article on the Big-Mac and purchasing-power parity.
PhD Students:
- Purchasing Power Parity and the Behavior of Prices and Nominal Exchange Rates across Exchange-Rate Regimes
[Lothian-2016-JIMF] shows that long-run PPP is still useful.
Recommended:
- The Purchasing Power Parity and Exchange-rate Economics Half a Century On
Also, see the extra readings on purchasing power parity.
Class 13: The Trade Balance, and the Current Account
- On the Centrality of the Current Account in International Economics
[Borio-2016-JIMF] questions the centrality of the current account in international economics.
- Changing Fortunes
[Milesi-2009-FinDev] relates the financial crisis, the current account, and the NIIP.
PhD Students:
- Is There a J-Curve?
Class 13: Price Rigidities
- Overshooting
Lecture Notes
- Dornbusch’s Overshooting Model After Twenty-Five Years
- On the Mark: A Theory of Floating Exchange Rates Based on Real Interest Rate Differentials
[Frankel-1979-AER] is a classic (and favorable) empirical test of the overshooting model.
PhD Students:
- Expectations and Exchange Rate Dynamics
[Dornbusch-1976-JPE] is the classic overshooting article.
- Empirical Exchange Rate Models of the Seventies: Do They Fit Out of Sample?
[Meese.Rogoff-1983-JIE] is the classic critique of in-sample fitting. Uses post-Bretton Woods exchange rates for several industrial countries to show that a simple random walk has more out-of-sample predictive power than monetary models, even when actual instead of forecasted explanatory variables are used in the out-ofsample forecast.
- The Role of Heterogeneity in Price Rigidities for Delayed Nominal Exchange Rate Overshooting
Recommended: see the extra readings on overshooting.
The Foreign Exchange Market Redux
Class 14: Forward Exchange and Risk Premia
- Risk Premia
Lecture Notes
- A Reconsideration of the Uncovered Interest Parity Relationship
[McCallum-1994-JME] finds UIP anomalies in the foreign exchange market.
PhD Students:
- Explaining Exchange Rate Anomalies in a Model with Taylor-Rule Fundamentals and Consistent Expectations
[Lansing.Ma-2017-JIMF] explains exchange rate anomalies in a model with Taylor-rule fundamentals and bounded rationality.
Recommended:
- Exchange Rate Expectations of Chartists and Fundamentalists
[Dick.Menkhoff-2013-JEDC] finds support for a chartist-fundamentalist approach.
If Time Remains
Any time remaining at the end of the term will be allocated to topics on the syllabus supplement. Topics will respond to student input, but those currently most likely to be considered are the following: Financial Programming, Fixed Exchange Rates, and Exchange-Rate Regime Choice.
References
Aizenman, Joshua, Yin-Wong Cheung, and Hiro Ito. (2014) International Reserves Before and After the Global Crisis: Is There No End to Hoarding?. Journal of International Money and Finance 52, 102--126.
Avdjiev, Stefan, et al. (2019) The Dollar, Bank Leverage, and Deviations from Covered Interest Parity. American Economic Review: Insights 1, 193-208. https://www.aeaweb.org/articles?id=10.1257/aeri.20180322
Baillie, Richard T., and Patrick C. McMahon. (1989) The Foreign Exchange Market: Theory and Econometric Evidence. : Cambridge University Press.
Barro, Robert J. (1978) Unanticipated Money, Output, and the Price Level in the United States. Journal of Political Economy 86, 549--80.
Black, Stanley W. (1973) International Money Markets and Flexible Exchange Rates. : Princeton University Press.
Blanchard, Olivier, Francesco Giavazzi, and Filipa Sa. (2005) International Investors, the U.S. Current Account and the Dollar. Brookings Papers on Economic Activity 2005, 1--49. https://www.brookings.edu/wp-content/uploads/2005/01/2005a_bpea_blanchard.pdf
Borio, Claudio. (2016) On the Centrality of the Current Account in International Economics. Journal of International Money and Finance 68, 266--274. http://www.sciencedirect.com/science/article/pii/S0261560616000309
Buiter, Willem H. (2008) "Can Central Banks Go Broke?". Center for Economic Policy Research CEPR Policy Insight 24. https://cepr.org/sites/default/files/policy_insights/PolicyInsight24.pdf
Ca' Zorzi, Michele, Marcin Kolasa, and Michal Rubaszek. (2017) Exchange Rate Forecasting with DSGE Models. Journal of International Economics 107, 127 - 146. http://www.sciencedirect.com/science/article/pii/S0022199617300375
Cooke, Dudley, and Engin Kara. (2022) The Role of Heterogeneity in Price Rigidities for Delayed Nominal Exchange Rate Overshooting. Journal of International Money and Finance 120, 102541. https://www.sciencedirect.com/science/article/pii/S0261560621001923
Cooper, Richard N. (1986) ,The United States as an Open Economy. ,Federal Reserve Bank of St. Louis Review , 3--24. https://research.stlouisfed.org/publications/review/1986/12/01/the-united-states-as-an-open-economy/
Dick, Christian D., and Lukas Menkhoff. (2013) Exchange Rate Expectations of Chartists and Fundamentalists. Journal of Economic Dynamics and Control 37, 1362--1383. https://www.sciencedirect.com/science/article/pii/S0165188913000614
Dornbusch, Rudiger. (1976) Expectations and Exchange Rate Dynamics. Journal of Political Economy 84, 1161--76.
Dornbusch, Rudiger. (1980) Open Economy Macroeconomics. New York: Basic Books.
Dornbusch, Rudiger, and Stanley Fischer. (1980) Exchange Rates and the Current Account. American Economic Review 70, 960--971.
Dornbusch, Rudiger, and Jeffrey A. Frankel. (1988) "The Flexible Exchange Rate System: Experience and Alternatives". In Borner, Silvio (Eds.) International Finance and Trade, London: International Economics Association, in association with Macmillan Press.
Eichenbaum, Martin, and Charles Evans. (1995) Some Empirical Evidence of the Effects of Shocks to Monetary Policy on Exchange Rates. Quarterly Journal of Economics 110, 975--1009.
Engel, Charles. (2014) "Exchange Rates and Interest Parity". In Helpman, Elhanan and Rogoff, Kenneth and Gopinath, Gita (Eds.) Handbook of International Economics, : Elsevier.
Fama, Eugene F. (1984) Forward and Spot Exchange Rates. Journal of Monetary Economics 14, 319--38.
Frankel, Jeffrey A. (1979) On the Mark: A Theory of Floating Exchange Rates Based on Real Interest Rate Differentials. American Economic Review 69, 610--22.
Frankel, Jeffery A. (1982) In Search of the Exchange Risk Premium: A Six-Currency Test Assuming Mean-Variance Optimization. Journal of International Money and Finance , .
Frenkel, Jacob A. (1976) A Monetary Approach to the Exchange Rate: Doctrinal Aspects and Empirical Evidence. Scandinavian Journal of Economics 78, 200--224. http://www.jstor.org/stable/i280391
Hallwood, C. Paul, and Ronald MacDonald. (2000) International Money and Finance. Cambridge, MA: Basil Blackwell.
Hansen, L.P., and Robert J. Hodrick. (1980) Forward Exchange Rates as Optimal Predictions of Future Spot Rates. Journal of Political Economy 88, 829--53.
Hausmann, Ricardo, and Federico Sturzenegger. (2006) "Global Imbalances or Bad Accounting? The Missing Dark Matter in the Wealth of Nations". Center for International Development at Harvard University Harvard CID Working Paper 124. http://www.cid.harvard.edu/cidwp/pdf/124.pdf
Higgins, Matthew, Thomas Klitgaard, and Cedric Tille. (2005) The Income Implications of Rising U.S. International Liabilities. Current Issues in Economics and Finance 11, 1--9. http://www.newyorkfed.org/research/current_issues/ci11-12.pdf
Hoffman, Dennis L., and Don E. Schlagenhauf. (1983) Rational Expectations and Monetary Models of Exchange Rate Determination: An Empirical Examination. Journal of Monetary Economics 11, 247--260.
Isard, Peter. (2006) "Uncovered Interest Parity". IMF Working Paper 06/96. https://ssrn.com/abstract=901883
Jones, Charles I., and Peter J. Klenow. (2016) Beyond GDP? Welfare across Countries and Time. American Economic Review 106, 2426--2457.
Jones, Charles I., and Paul M. Romer. (2010) The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital. American Economic Journal: Macroeconomics 2, 224--45. http://www.aeaweb.org/articles?id=10.1257/mac.2.1.224
Kaldor, Nicholas. (1957) A Model of Economic Growth. The Economic Journal 67, 591--624. http://www.jstor.org/stable/2227704
Krueger, Anne O. (1998) Whither the World Bank and the IMF?. Journal of Economic Literature 36, 1983--2020.
Krugman, Paul R., Maurice Obstfeld, and Marc Melitz. (2018) International Finance: Theory and Practice. New York, NY: Prentice Hall.
Lansing, Kevin J., and Jun Ma. (2017) Explaining Exchange Rate Anomalies in a Model with Taylor-Rule Fundamentals and Consistent Expectations. Journal of International Money and Finance 70, 62--87. http://www.sciencedirect.com/science/article/pii/S0261560616300936
Leamer, Edward E. (2009) Macroeconomic Patterns and Stories. Berlin: Springer-Verlag.
Levich, R.M. (1984) "Empirical Studies of Exchange Rates: Price Behavior, Rate Determination, and Market Efficiency". In Kenen, Peter and McKinnon, Ronald (Eds.) Handbook of International Economics, Amsterdam: North-Holland.
Lothian, James R. (2016) Purchasing Power Parity and the Behavior of Prices and Nominal Exchange Rates across Exchange-Rate Regimes. Journal of International Money and Finance 69, 5--21. http://www.sciencedirect.com/science/article/pii/S0261560616300614
Lothian, James R., and Cornelia H. McCarthy. (2009) The Behavior Of Money And Other Economic Variables: Two Natural Experiments. Journal of International Money and Finance 28, 1204 - 1220. http://www.sciencedirect.com/science/article/B6V9S-4WKTWR8-6/2/0abaa871bebe05610401dc63f41dbf25
Lucas, R. E. (1993) Making a Miracle. Econometrica 61, 251--272. http://www.jstor.org/stable/2951551
Lucas, Jr. (2014) Liquidity: Meaning, Measurement, Management. Federal Reserve of St. Louis Review 96, 199--212. http://research.stlouisfed.org/publications/review/article/10204
Lukianoff, Greg, and Jonathan Haidt. (2018) The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting Up a Generation for Failure. : Penguin Books.
Lumsdaine, Robin L., and Eswar S. Prasad. (2003) Identifying the Common Component of International Economic Fluctuations: A New Approach. Economic Journal 113, 101--127.
Mankiw, N. Gregory, David Romer, and David N. Weil. (1992) A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics 107, 407--438. https://www.jstor.org/stable/2118477
Mark, Nelson C. (2001) International Macroeconomics and Finance: Theory and Econometric Methods. Hoboken, New Jersey: Blackwell Publishers.
McCallum, Bennett T. (1994) A Reconsideration of the Uncovered Interest Parity Relationship. Journal of Monetary Economics 33, 105--132.
McCallum, Bennett T. (1996) International Monetary Economics. New York: Oxford University Press.
McCandless, George T. (1995) Some Monetary Facts. em Federal Reserve Bank of Minneapolis Quarterly Review 19, 2--11. https://www.minneapolisfed.org/research/quarterly-review/some-monetary-facts
Meese, Richard A., and Kenneth Rogoff. (1983) Empirical Exchange Rate Models of the Seventies: Do They Fit Out of Sample?. Journal of International Economics 14, 3--24. https://www.sciencedirect.com/science/article/pii/002219968390017X
Milesi-Ferretti, Gian Maria. (2009) Changing Fortunes. Finance and Development 46, 20--22. http://www.imf.org/external/pubs/ft/fandd/2009/03/milesi.htm
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Pakko, Michael R., and Patricia S. Pollard. (1996) For Here or To Go? Purchasing Power Parity and the Big Mac. em Federal Reserve Bank of St. Louis Review 78, 3--21. http://research.stlouisfed.org/publications/review/96/01/9601mp.pdf
Phelps, Edmund S. (1965) Second Essay on the Golden Rule of Accumulation. American Economic Review 55, 793--814. http://www.jstor.org/stable/1823937
Ramsey, Frank P. (1928) A Mathematical Theory of Saving. Economic Journal 38, 543--559. http://www.jstor.org/stable/2224098
Rapach, D., and M. Wohar. (2002) Testing the Monetary Model of Exchange Rate Determination: New Evidence from a Century of Data. Journal of International Economics 58, 349--385.
Robinson, Joan. (1962) A Neo-Classical Theorem. The Review of Economic Studies 29, 219--226. http://www.jstor.org/stable/2295956
Rogoff, Kenneth. (2002) "Dornbusch's Overshooting Model After Twenty-Five Years". International Monetary Fund Working Paper 02/39. https://www.imf.org/en/Publications/WP/Issues/2016/12/30/Dornbuschs-Overshooting-Model-After-Twenty-Five-Years-15653
Rogoff, Kenneth. (2009) Exchange Rates In The Modern Floating Era: What Do We Really Know?. Review of World Economics 145, 1--12.
Romer, David. (1993) Do Students Go to Class? Should They?. Journal of Economic Perspectives 7, 167--174.
Rose, Andrew K., and Janet L. Yellen. (1989) Is There a J-Curve?. Journal of Monetary Economics 24, 53--68.
Sager, Michael, and Mark Taylor. (2006) Under the Microscope: The Structure of the Foreign Exchange Market. International Journal of Finance and Economics 11, 81--95.
Sato, Ryuzo. (1963) Fiscal Policy in a Neo-Classical Growth Model: An Analysis of the Time Required for Equilibrating Adjustment. Review of Economic Studies 30, 16--23.
Scholl, Almuth, and Harald Uhlig. (2008) New Evidence on the Puzzles: Results from Agnostic Identification on Monetary Policy and Exchange Rates. Journal of International Economics 76, 1--13.
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Vo, Hai Long, and Duc Hong Vo. (2022) The Purchasing Power Parity and Exchange-rate Economics Half a Century On. Journal of Economic Surveys t.b.d., t.b.d.. https://onlinelibrary.wiley.com/doi/abs/10.1111/joes.12504
Waller, Christopher J. (2015) Microfoundations of Money: Why They Matter. Federal Reserve Bank of St. Louis Review 97, 289--301. https://research.stlouisfed.org/publications/review/2015/12/07/microfoundations-of-money-why-they-matter/
Wang, Peijie. (2020) The Economics of Foreign Exchange and Global Finance. Berlin; Heidelberg: Springer. https://doi.org/10.1007/978-3-662-59271-7_1
Wilson, Charles A. (1979) Anticipated Shocks and Exchange Rate Dynamics. Journal of Political Economy 87, 639--647.
Woo, W.T. (1985) The Monetary Approach to Exchange Rate Determination under Rational Expectations: The Dollar-Deutschmark Rate. Journal of International Economics 18, 1--16.
The syllabus above is Copyright © 2022 by Alan G. Isaac. Some rights are reserved. This work is licensed under the Creative Commons Attribution License version 2 (or any subsequent version).
Addendum
Study Strategies
Attend class. Studies indicate that attendance improves performance [Romer-1993-JEconPersp].
Ask questions during lecture. Don't let your questions go unanswered!
Take good notes. Good notes will be crucial to your performance on the examinations. Some studies suggest that taking notes by hand is more effective than taking them on your laptop (e.g., [Mueller.Oppenheimer-2014-PsychSci] and [Mueller.Oppenheimer-2014b-PsychSci]).
Don't reserve your studying for the weekends. I suggest an hour per day, every day. Daily exposure is much better than cramming.
Study someplace that is not distracting. Put your connected devices completely out of view and out of reach.
Do the required reading. I draw on the required readings for exam questions.
Don't read it just once.
If you own a paper textbook, read with a highlighter or pencil.
Outline the important points.
Do any end of chapter problems. I often develop exam questions based on these problems.
Discuss the readings and problems in a study group. Students who use them tell me that study groups are very helpful. (You may use the class email list to search for study partners.) Make up problems in your study group as part of exam preparation.
Discuss readings and problems on the course mailing list or in the discussion forum. Don't let your questions go unanswered!
If you feel timid about stating your question in public, email it to me directly. Don't let your questions go unanswered!
Required and Recommended Syllabus Sections
The following sections are required or recommended on all syllabi at American University. The language is unaltered from suggestions provided by the administration.
Academic Support and Access Center (ASAC) MGC 243, 202-885-3360.
All students may take advantage of the Academic Support and Access Center (ASAC) for individual academic skills, counseling, workshops, tutoring and writing assistance, as well as Supplemental Instruction. All services are free. The services include the Writing Center (first floor of Bender Library), which assists students with academic writing and assignments. The Math/Stat Lab (Myers Building, 202-885-3154) which provides mathematics and statistics tutoring. Additional content tutoring is also available in the ASAC’s Tutoring Lab.
Students with Disabilities
American University is committed to making learning and programming as accessible as possible. Students who wish to request accommodations for a disability, must notify me with a letter of approved accommodations from the ASAC. As the process for registering and requesting accommodations can take some time, and as accommodations, if approved, are not retroactive, I strongly encourage students to contact the ASAC as early as possible. For more information about the process for registering and requesting disability-related accommodations, contact ASAC.
Academic Integrity
Standards of academic conduct are set forth in the University’s Academic Integrity Code. By registering for this course, you have acknowledged your awareness of the Academic Integrity Code and your obligation to become familiar with your rights and responsibilities as defined by the code. Violations of the Academic Integrity Code will not be treated lightly, and disciplinary actions will be taken should violations occur. The standard sanction for violations is failure of the course.
Emergency Preparedness
In the event of a declared pandemic (influenza or other communicable disease), American University will implement a plan for meeting the needs of all members of the university community. Should the university be required to close for a period of time, we are committed to ensuring that all aspects of our educational programs will be delivered to our students. These may include altering and extending the duration of the traditional term schedule to complete essential instruction in the traditional format and/or use of distance instructional methods. Specific strategies will vary from class to class, depending on the format of the course and the timing of the emergency. Faculty will communicate class-specific information to students via AU e-mail and Blackboard. Students are responsible for checking their AU e-mail regularly and keeping themselves informed of emergencies. In the event of a declared pandemic or other emergency, students should refer to the AU Web site (american.edu/emergency) and the AU information line at (202) 885-1100 for general university-wide information, as well as contact their faculty and/or respective dean’s office for course and school/college-specific information.