Required Text

Mordechai E. Kreinin, International Economics: A Policy Approach, Eighth Edition, The Dryden Press, Harcourt Brace College Publishers, 1998.

Additional Reading Sources

Additional readings are highly recommended, and can be found under topic headings listed below. These readings are of varying degrees of difficulty, and are included to assist in understanding of the textbook material or, in some cases, to provide information not included in the textbook.

You should also consult other sources of information such as: The Encyclopedia of Economics; the International Encyclopedia of the Social Sciences; The New Palgrave: A Dictionary of Economics; the OECD Main Economic Indicators; the World Bank World Development Report; the American Economic Review and the Brookings Papers on Economic Activity; and The Economist and the IMF Survey (for current general information).

Newspapers that are good sources of information include The Christian Science Monitor, The New York Times and The Wall Street Journal; other noteworthy sources are newsletters issued by Federal Reserve district banks and by major commercial banks. Valuable magazines and reports on international economic policy include: Business Week; the Congressional Quarterly Weekly Report; and the Far East Economic Review. You might also wish to review other international economics textbooks, such as Peter H. Lindert and Thomas A. Pugel, International Economics (11th edition may now be available), Richard D. Irwin; or Dennis R. Appleyard and Alfred J. Field, Jr., International Economics, Third Edition, Chicago, Illinois: Irwin/ McGraw-Hill, 1998. You should also consult a basic economics textbook such as N. Gregory Mankiw, Principles of Economics, The Dryden Press, Harcourt Brace College Publishers, 1998.

Finally, look for publications (monographs) from the Institute for International Economics (check their web page as well) for timely analyses of current international issues. Look, too, for publications and website information from other think tanks, such as, among others:

· The Brookings Institution http://www.brookings.org /

· The Cato Institute http://www.cato.org/pubs/pubs.html

· The Heritage Foundation http://www.heritage.org/

· American Enterprise Institute for Public Policy Research http://www.aei.org/

Exams

There will be two examinations, averaged to determine the final grade. The first examination will be given roughly halfway through the course of the semester, and will include all textbook chapters, lectures, classroom discussion, videos, and other information discussed to that point. The second examination, which will be scheduled during final examination week, will include all chapters, lectures, classroom discussion, videos, and other information covered after the midterm. Class attendance and participation will also count in determining the final grade, particularly in borderline grading situations.

Topics to be Covered

We will explore the fundamentals of international monetary economics, macroeconomic theory and policy, and issues in world monetary arrangements. This means we will be covering:

· The foreign exchange market.

· What determines exchange rates?

· The threat of unstable exchange rates.

· Income and foreign exchange.

· Internal and external balances with fixed exchange rates.

· Floating exchange rates and internal balance.

· The world monetary climate.

· The Mexican and Asian financial crises.

· Currency Boards.

· Dollarization.

· The IMF and the World Bank: Pro and Con.

General topic headings are shown below, along with required and suggested reading assignments. We will follow the text through these topics chapter by chapter, which means assignments for the following class will depend upon where we are in the text. You will be directed at the end of each class as to your reading assignment for the following class. On topics not covered in the textbook, consult the readings under each section.

Topic 1: Statement of International Transactions

Kreinin, chapter 10

Christopher L. Bach, U.S. International Transactions, Fourth Quarter and Year 1999, U.S. Department of Commerce, Survey of Current Business, April 2000. http://www.bea.doc.gov/bea/di/bopq/maintext.htm

Economic Briefing: Measuring the Balance of Payments, U.K. Treasury, 1995.

http://www.hm-treasury.gov.uk/pub/html/econbf/eb08/eb3.html

Richard Young, Introductory Economics Revision Notes: Balance of Payments, Biz/ed, 1996.

http://www.bized.ac.uk/stafsup/options/notes/econ218.htm

Topic 2: Market-Determined Exchange Rates

Kreinin, chapter 11

Eleftherios N. Botsas, The ABCs of the Foreign Exchange Market.

http://www.sba.oakland.edu/ecnlettr/iel39tx2.htm

Sam Y. Cross, All About the Foreign Exchange Market in the United States, Federal Reserve Bank of New York, 1998, Chs. 1-9 (skim).

http://www.ny.frb.org/pihome/addpub/usfxm/

“Big MacCurrencies,” The Economist, April 12, 1997, p. 71 (see also more recent versions).

Topic 3: The International Currency System

Kreinin, chapter 12

Michael Barone, Keynesian Politics Has Lost Its Currency, The Wall Street Journal. (handout).

Charles W. Calomiris, The IMF’s Imprudent Role as Lender of Last Resort, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-11.html

George Melloan, New ‘Architecture’ for Global Finance? Please Specify, The Wall Street Journal, Tuesday, September 22, 1998. (handout).

Erik R. Peterson, Surrendering to Markets, The Washington Quarterly, Volume 18, Number 4, Autumn 1995, pp. 103-115.

Topic 4: Domestic Policies to Adjust the Balance of Payments

Kreinin, chapter 13

Topic 5: Effects of Exchange Rate Adjustment on the Current Account

Kreinin, chapter 14

Topic 6: The Monetary Approach to the Balance of Payments

Kreinin, chapter 15

David Ranson, Inflation Steals the Benefits of Devaluation. (handout).

Topic 7: Alternative Exchange Rate Regimes

Kreinin, chapter 16

Matt Marshall and David Wessel, One Currency, One Central Bank, One Big Question: Europe is Creating a Single Monetary Authority, but Will It Work? (handout).

David Wessel and Bob Davis, Currency Controls Gain a Hearing as Crisis in Asia Takes Its Toll, The Wall Street Journal. (handout)

Leland B. Yeager, How to Avoid International Financial Crises, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-4.html

Special Euro Issue, World Trade, January 1999, pp. 34-91.

Lester C. Thurow, Get Ready, U.S. Investors; You’ll Love the Euro, USA Today. (handout).

George Melloan, Facing the Risks of E-Day, Euro Fans Grow Nervous. (handout).

Jonathan Hakim, Over There, Monetary Union. Over Here, an Opportunity, New York Times, November 23, 1997. (handout).

Topic 8: Historical Survey

Kreinin, chapters 17, 18, 19

J. Carter Beese, Jr., Reengineering Regulation: Maintaining the Competitiveness of the U.S. Capital Markets, The Washington Quarterly, Volume 18, Number 4, Autumn 1995, pp. 133-143.

Michael Bordo, International Rescues versus Bailouts: A Historical Perspective, Cato Journal, Volume 18, Number 3, Winter 1999.

http://www.cato.org/pubs/journal/cj18n3/cj18n3-7.pdf

Charles W. Calomiris, The IMF’s Imprudent Role as Lender of Last Resort, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-11.html

Kevin Dowd, Monetary Policy in the 21^st Century: An Impossible Task? Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-2.html

Milton Friedman, Markets to the Rescue, The Wall Street Journal, Tuesday, October 13, 1998. (handout).

Francisco Gil-Diaz, The Origin of Mexico’s 1994 Financial Crisis, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-14.html

Alan Greenspan, The Globalization of Finance, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-1.html

Group Of Seven Statement on Economic, Financial Issues. (handout).

Steve H. Hanke, Critics Err – Mexico Still Needs a Currency Board. (handout).

David D. Hale, Is It a Yen or a Dollar Crisis in the Currency Market? The Washington Quarterly, Volume 18, Number 4, Autumn 1995, pp. 145-171.

A. James Meigs, Lessons for Asia from Mexico, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-6.html

Erik R. Peterson, Surrendering to Markets, The Washington Quarterly, Volume 18, Number 4, Autumn 1995, pp. 103-115.

Jeffrey D. Sachs, Creditor Panics: Causes and Remedies, Cato Journal, Volume 18, Number 3, Winter 1999, pp. 377-390.

Anna J. Schwartz, International Financial Crises: Myths and Realities, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-3.html

Judy Shelton, The Dollar and the Deficit. (handout).

Judy Shelton, How to End Currency Gyrations. (handout).

Judy Shelton, Time for a New Bretton Woods, The Wall Street Journal, Thursday, October 15, 1998. (handout).

Roy C. Smith, Risk and Volatility, The Washington Quarterly, Volume 18, Number 4, Autumn, 1995, pp. 117-131.

Joan Edelman Spero, The Politics of International Economic Relations, Fourth Edition, New York, St. Martin’s Press, 1990, pp. 31-66, 159-202.

Lawrence H. Summers, Building an International Financial Architecture for the 21^st Century, Cato Journal, Volume 18, Number 3, Winter 1999.

http://www.cato.org/pubs/journal/cj18n3/cj18n3-sum.pdf

Lester C. Thurow, Get Ready, U.S. Investors: You’ll Love the Euro, USA Today. (handout).

Sidney Weintraub, The Depth of Economic Integration between Mexico and the United States, The Washington Quarterly, Volume 18, Number 4, Autumn 1995, pp. 173-184.

Walter B. Wriston, Dumb Networks and Smart Capital, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-12.html

ISSUES IN DEPTH:

Topic 9: The Asian Financial Crisis

Kreinin, chapter 19

C. Fred Bergsten, The New Asian Challenge, Institute for International Economics, Working Paper 00-4, March 2000.

http://207.238.152.36/CATALOG/WP/2000/00-4.htm

Marcus W. Brauchli, Foreign Capital Holds Key in Southeast Asia. (handout).

Martin Feldstein, All is Not Lost for the Won. (handout).

Steve H. Hanke, How to Establish Monetary Stability in Asia, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-9.html

Holman W. Jenkins, Jr., Let the Banks Bail Out Their Indonesian Clients, The Wall Street Journal, March 11, 1998. (handout).

Holman W. Jenkins, Jr., Why the view of Asia’s Bonfire Is So Pretty, The Wall Street Journal, August 26, 1998. (handout).

Darren McDermott and Karene Witcher, Bartering Gains Currency in Hard-Hit Southeast Asia, The Wall Street Journal. (handout).

Allan H. Meltzer, Asian Problems and the IMF, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-10.html

Mark Mobius, Asia Needs a Single Currency, The Wall Street Journal, February 19, 1998. (handout).

Marcus Noland, How the Sick Man Avoided Pneumonia: The Philippines in the Asian Financial; Crisis, Institute for International Economics, Working Paper 00-5, May 2000.

http://207.238.152.36/CATALOG/WP/2000/00-5.htm

Marcus Noland, Sherman Robinson and Zhi Wang, The Continuing Asian Financial Crisis: Global Adjustment and Trade, Institute for International Economics, Working Paper 99-4, March 1999.

http://207.238.152.36/CATALOG/WP/1999/99-4.htm

Mary Anastasia O’Grady, Note to Brazil: Remember the Baht and Defend the Real, The Wall Street Journal, October 31, 1997. (handout)

Nouriel Roubini, What Caused Asia’s Economic and Currency Crisis and Its Global Contagion?

http://www.stern.nyu.edu/~nroubini/asia/AsiaHomepage.html

Robert E. Rubin, Address on the Asian Financial Situation to Georgetown University, January 21, 1998.

David Wessel and Bob Davis, Currency Controls Gain a Hearing as Crisis in Asia Takes Its Toll, The Wall Street Journal. (handout)

Y.C. Richard Wong, Lessons From the Asian Financial Crisis, Cato Journal, Volume 18, Number 3, Winter 1999.

http://www.cato.org/pubs/journal/cj18n3/cj18n3-9.pdf

Topic 10: Currency Boards

Steve H. Hanke, Critics Err – Mexico Still Needs a Currency Board. (handout).

Steve H. Hanke, How to Establish Monetary Stability in Asia, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-9.html

Kurt Schuler, A Currency board Beats IMF Rx, The Wall Street Journal, February 18, 1998. (handout).

Topic 11: Dollarization

Prepared Testimony of Wayne Angell, Senate Banking, Housing and Urban Affairs Committee, Hearing on Official Dollarization in Emerging Market Countries, April 22, 1999.

http://www.senate.gov/~banking/99_04hrg/042299/angell.htm

Prepared Testimony of C. Fred Bergsten, Senate Banking, Housing and Urban Affairs Committee, Hearing on Official Dollarization in Emerging Market Countries, April 22, 1999.

http://www.senate.gov/~banking/99_04hrg/042299/bergsten.htm

Prepared Testimony of Guillermo A. Calvo, Senate Banking, Housing and Urban Affairs Committee, Hearing on Official Dollarization in Emerging Market Countries, April 22, 1999.

http://www.senate.gov/~banking/99_04hrg/042299/calvo.htm

Joint Economic Committee, Basics of Dollarization, January 2000.

http://www.senate.gov/~jec/basics.htm

Senate Banking Committee, Citizen’s Guide to Dollarization, Committee Documents Online, 106^th Congress.

http://www.senate.gov/~banking/docs/reports/dollar.htm

Prepared Testimony of Judy Shelton, Senate Banking, Housing and Urban Affairs Committee, Hearing on Official Dollarization in Emerging Market Countries, April 22, 1999.

http://www.senate.gov/~banking/99_04hrg/042299/shelton.htm

Lawrence Summers, Dollarization, in Testimony before the Senate Banking Committee Subcommittee on Economic Policy and Subcommittee on International Trade and Finance, April 22, 1999.

http://www.ustreas.gov/press/releases/pr3098.htm

Topic 12: The IMF and the World Bank: Pro and Con

Soren Ambrose, The IMF Has Gotten Too Big for Its Britches. (handout).

Charles W. Calomiris, The IMF’s Imprudent Role as Lender of Last Resort, Cato Journal, Volume 17, Number 3, Winter 1998.

http://www.cato.org/pubs/journal/cj17n3-11.html

Horst Kohler, The IMF in a Changing World, Speech at the National Press Club, August 7, 2000.

http://www.imf.org/external/np/speeches/2000/080700.htm

George Melloan, New ‘Architecture’ for Global Finance? Please Specify, The Wall Street Journal, Tuesday, September 22, 1998. (handout).

David Rockefeller, Why We Need the IMF. (handout).

Andrew Steer and Jocelyn Mason, The Role of Multilateral Finance and the Environment: A View from the World Bank.

http://www.law.indiana.edu/glsj/vol3/no1/steer.html

Lawrence H. Summers, The Role of Multilateral Institutions in Preserving International Financial Stability, Bretton Woods Committee Annual Meeting, February 13, 1998. (handout).

Lawrence Summers, Why America Needs the IMF. (handout).

U.S. Department of the Treasury, The International Monetary Fund, 2/10/98. (handout).

Ian Vasquez, At the World Bank, Money is No Object. (handout).

The Wall Street Journal, The IMF Crisis, editorial. (handout).

The Wall Street Journal, IMFonomics. (handout).

The Wall Street Journal, What’s an IMF For? (handout).

Andrew Steer and Jocelyn Mason, The Role of Multilateral Finance and the Environment: A View from the World Bank.

http://www.law.indiana.edu/glsj/vol3/no1/steer.html

Michael M. Phillips, IMF and Critics Debate Accounting Principles, The Wall Street Journal, September 28, 1998. (handout).

Ian Vasquez, At the World Bank, Money Is No Object, The Wall Street Journal. (handout).

Anne Swardson and Clay Chandler, G-7 Calls for IMF Bailout Mechanism, The Washington Post. (handout).

The Wall Street Journal, The IMF Crisis. (handout).

The Wall Street Journal, What’s an IMF For? (handout).

David Sacks and Peter Thiel, The IMF’s Big Wealth Transfer, The Wall Street Journal, March 13, 1998. (handout).

The Wall Street Journal, The IMF in Action. (handout).