Economics 3370

World Economy



Professor: Douglas Nelson

Office: Tilton 108 (Murphy Institute), Phone: 865-5317

Office Hours: Tuesday and Thursday, 3:30-5:30

Phone: 865-5317

email: dnelson@tulane.edu

Webpage: http://www.tulane.edu/~dnelson/



Even the most cursory reading of the news should alert us to the importance of international economic relations. In its more spectacular forms, these relations are front page news, but even in their more mundane forms international trade, international investment, and international money affect our lives in profound and intimate ways. Whether to increase our effectiveness in our directly economic pursuits or to meet the burdens of good citizenship, an understanding of these forces is clearly important.


This course offers a non-technical introduction to the analysis of international economic issues. The goal of the course is to increase your knowledge of these issues and your tools for analyzing them. While we will be primarily interested in developing standard microeconomic and macroeconomic approaches to these issues, we will also attempt to present a variety of other useful approaches from political science, sociology and less mainstream parts of economics. Among the specific issues with which we shall be concerned this semester are: protection and protectionism; the multinational firm; the debt crisis; international macroeconomic policy coordination; and European integration.


Prerequisites: Although this course is “introductory” and “non-technical”, it is still an economics course. Thus, some exposure to micro- and macroeconomics is necessary to effective class participation. Specifically, you will need Econ 101 and 102. We will be making substantial use of algebraic and geometric argument in this class and it is assumed that you have a level of mathematical skill consistent with high school algebra and geometry.


Evaluation: Your performance in this course will be evaluated on the basis of 3 examinations (worth 100 points each). To receive an A, you must earn at least 90 percent of the points available. To pass the course you must earn at least 60 percent of the points available. Grades between these limits will be determined on the basis of your performance relative to that of the class as a whole.


Readings for the course will be drawn from:

 

Steven Brakman, Harry Garretsen, Charles van Marrewijk, and Arjen van Witteloostuijn (2006). Nations and Firms in the Global Economy. New York: Cambridge. [BGMW]

 

Text website: http://www2.econ.uu.nl/users/marrewijk//global/index.htm


Homework The website for the textbook has a number of very useful review questions and computational exercises. Answers for the exercises can also be found on the website. These provide a way of checking whether you are understanding the material.


Examination format. All exams will have the following format: about 40% short answer questions and about 60% essays. In general there will be more questions of both types than must be answered, so you will have some choice (though there is often one mandatory question which everyone must answer). Examination questions must be answered in bluebooks, which you must provide.


Policy on examinations. The midterm exams will be given on 5 October and 14 November.. Unless you have a standard university accepted excuse for missing the exam (e.g. health with standard university form), you must take the exams at their scheduled time. The third exam will be given during the final examination period. That is, it will only be given on: Wednesday, 19 December 2011, 8:00-12:00 (there will be no exceptions so do not make travel plans that conflict with this).


Honor Code: All students are responsible for knowing and adhering to Tulane University’s Honor Code, available at http://www.tulane.edu/~jruscher/dept/Honor.Code.html.


Some Good Advice (At No Extra Charge): First, keep current with the reading. That will allow you to make the most of lecture. Second, the webpage for this textbook contains exercises and some sample answers. These provide both practice and a general check on how well you are understanding the material. This earns no credit, but it does provide a useful check prior to taking the exam on your learning of the material. Third, form a study group and do the exercises together. Actively presenting your answers to others is one of the best ways to test your knowledge. Fourth, ask questions in class. If you read something and it is unclear and then it is unclear during lecture, ask about it. Your classmates will probably thank you. This is one of the few ways, before an exam, that I can gauge how the material is getting across. Fifth, come see me during my office hours. This is another opportunity to get clarification and help on material about which you are unclear. But don't wait until the last minute, by then it is usually too late.




SACS-Related Material


I am aware that Tulane students are able to read a standard university syllabus and determine the content of the course and its relation to the major and the individual student’s course of study. However, the administration of Tulane University, along with the Southern Association of Colleges and Schools (SACS–which “accredits” primary and secondary schools as well as all varieties of 2 and 4 year undergraduate programs [with very little in the way of adjustment in rubrics, metrics, etc.]), has determined that you require additional information. I collect this material in a separate section so that you can refer to it, or discard it, as you consider appropriate.


Relevant Program Outcomes Addressed in this Course:

 

1.           Apply the basic (general equilibrium) market model to explain and predict price changes in individual as a function of changes in the international trade environment.

2.            Identify and assess the opportunity costs involved in any economic activity, whether the decision-maker is a private individual, business firm, or social organization. Individual, firm and governmental decisions relating to international trade, investment, etc. will be analyzed in detail.

3.           Identify economic issues and problems, gather data needed to evaluate them, and analyze that data to gain insights into economic behavior and formulate possible solutions. As the course objectives state at the beginning of this syllabus, we will be doing all of this with particular reference to international trade and investment (real and financial).

4.           Apply the tools of economic analysis to specific policy issues at a level appropriate to both majors in Economics and the University community more generally. This is a lower level class, so the tools applied to the analysis of the world economy are those consistent with such a level.

5.           Gain an in-depth understanding of several specialized areas in economics, thereby learning how to apply microeconomic and macroeconomic theory to specific policy issues. Same as (4).

 

“Learning Objectives”: Upon completion of this course you should have developed a practical knowledge of:

 

Comparative advantage (i.e. opportunity cost as applied between countries);

 

The role of technology, endowments, and market structure in the determination of comparative advantage;

 

The relationship between globalization (especially trade) and labor market outcomes;

 

The relationship of trade policy to national welfare and general economic performance;

 

The rudiments of balance of payments accounting and its relationship to national income accounting;

 

The nature and implications of international capital mobility;

 

The relationship between globalization (mainly capital mobility) and financial crises; and

 

The implications of globalization (again, mainly capital mobility) for macroeconomic performance and policy.


Economics 3370                             SYLLABUS                                        Fall 2011

 

Topic I. Introduction to the World Economy

 

● 29 & 31 August: Introducing the Global Economy

 

■ BGMW, Chapter 1

 

● 5 & 7 September: Essential Accounting Relations

 

■ BGMW, Chapter 2

 

Topic II. International Trade

 

● 12 & 14 September: Trade and Comparative Advantage

 

■ BGMW, Chapter 3

 

● 19 & 21 September: Trade and Competitive Advantage

 

■ BGMW, Chapter 4

 

● 26 & 28 September: Firms, Location and Agglomeration

 

■ BGMW, Chapter 5

 

Midterm Review: 3 October

Midterm 1: 5 October.

 

Topic III. Capital, Currency and Crises

 

● 10 & 12 October: International Capital Mobility

 

■ BGMW, Chapter 6

 

● 17 & 19 October: Gains from Capital Market Integration

 

BGMW, Chapter 7

 

● 24 October & 2 November: Investors, Exchange Rates and Currency Crises

 

BGMW, Chapter 8

 

● 7 & 9 November: Financial Crises, Firms and the Open Economy

 

BGMW, Chapter 9

 

Midterm 2: 14 November.

 

Topic IV. Policy, Dynamics and Organization

 

● 16 & 21 November: Restricting International Commodity Flows

 

■ BGMW, Chapter 10.1 - 10.4 & 10.6

Tariff Schedule of the United States--Annotated

■ Bown (2010). "Antidumping, safeguards, and protectionism during the crisis: Two new insights from 4th quarter 2009" VOX EU

 

●28 November: Restricting International Factor Flows

 

■ BGMW, Chapter 10.7 - 10.13

■ Magud, Reinhart & Rogoff (2011), "Capital controls: A meta-analysis approach" Vox EU

 

●5 December: Global Governance, 1: Economic Integration

 

■ BGMW, Chapter 10.5

■Eichengreen (2010). "Was the Euro A Mistake". Vox EU

 

● 7 December: Global Governance, 2: International Architecture

 

■tba

 

Final Examination: 19 December, 8:00-12:00.