Courses NonDegree Display 2017-2018

Course Description To PDF
Course title Open Macroeconomics in a Global Society
Course code EBC4029
ECTS credits 6,5
Assessment None
Period Start End Mon Tue Wed Thu Fri
2 30-10-2017 22-12-2017 X X
Level Advanced
Coordinator Clemens Kool
For more information:
Language of instruction English
This course is an intermediate macroeconomic course. The students are expected to extend their knowledge in international economics, acquired during their bachelor. At the end of the course the students should be able to:
-determine the optimal exchange rate for a country and a particular situation.
-investigate non-rationality and risk aversion as potential problems. In both cases, a portfolio balance model determines the equilibrium exchange rate.
-focus on the real exchange rate to determine the terms of trade and relative welfare.
-study financial crises.
- have a fresh idea on the European integration process and the single currency and their consequences on monetary and fiscal policy.
In a world of increasing economic integration, caused by – among other things – technological developments and the liberalization of capital and trade flows, the standard macroeconomic analysis using a closed economy framework does not suffice. In this course we, therefore, start from an open economy perspective. The first part of the course is of a theoretical nature, to provide a general framework of analysis. In the second part, we apply this theoretical framework to real world problems. We initially summarize the theoretical and empirical determinants of nominal and real exchange rates, both in the short and the long run, assuming the exchange rate is free to float. This draws on prior knowledge as presented in the literature for the second year course in International Monetary Economics. Subsequently, tutorial group meetings are used to discuss extensions. These extensions are fourfold.
- First, fixed exchange rate systems are further investigated. Many governments prefer fixed to floating rates. However, keeping exchange rates fixed proved much more difficult than was once thought.
- Second, interest rate parity is investigated and both non-rationality and risk aversion are discussed as potential problems. In both cases, a portfolio balance model determines the equilibrium exchange rate.
- Third, the real exchange rate is focus of analysis. In the end, the real exchange rate is more interesting than the nominal one. Ultimately, money may be no more than a (neutral) veil. The real exchange rate determines the terms of trade and relative welfare. Also, the real exchange rate relates financial markets and goods markets to get an overall equilibrium. Persistent real exchange rate developments may have important effects on the domestic economy.
- Fourth, the possibilities of monetary and fiscal policy to obtain internal and external equilibria are studied together with the adjustment role of the (real) exchange rate. Also, the link with the labor market and wage-setting is considered.
After the theoretical part, students will be asked to apply their new knowledge to real-world cases. The purpose is to train the student to recognize the underlying characteristics of new (unstructured) problems and to put them in the appropriate framework. The aim is to formulate a strategy to solve the problem at hand based on an appropriate theoretical framework.
Selected chapters and articles.
Second-year International Monetary Economics course (level book Krugman and Obstfeld), “International Economics: Theory and Policy”. Exchange students need to have obtained a Bachelor degree with a major in Economics or in Econometrics/Quantitative Economics.
an advanced level of English
Teaching methods PBL / Presentation
Assessment methods Participation / Written Exam
Evaluation in previous academic year For the complete evaluation of this course please click "here"
This course belongs to the following programmes / specialisations
Master Econometrics and OR Other Electives
Master Financial Economics Electives
Master Fiscale Economie Economics Electives
SBE Exchange Master Master Exchange Courses
SBE Non Degree Courses Master Courses