International Economics


This course offers an introduction to international economics for Phd students. It is the first graduate course on the subject and is a prerequisite for the Spring semester courses in advanced international macroeconomics offered by Nicolas Coeurdacier and in advanced international trade offered by Thomas Chaney.
The focus is on trade and international macro theory, but the course also addresses some empirical facts and quantitative methods in modern international trade and macroeconomics.

Evaluation: two homeworks (one trade, one international macro) and one final exam. The two homeworks will count for 50% of the grade and the final exam for 50% too.

First homework assignment

Second homework assignment (slides on basics of Balassa-Samuelson) Sketch of solutions

Final exam, solutions to 1st part

I. International trade part:

1) Modern approaches to Ricardo


2) Trade with increasing returns, monopolistic competition and the Home Market Effect

Slides (note revised version with additional material starting page 70)

a) New Trade Theory (Krugman, 1979)

b) Monopolistic competition à la Dixit-Stiglitz

c) The Dixi-Stiglitz-Krugman model of international trade, the Home Market Effect and an introduction to firm heterogeneity and trade

d) Variable markups in international trade (and macro) (Atkeson-Burstein, 2008)

3) A primer on the welfare consequences of trade

II. Internartional macroeconomics part

1) Current account dynamics, international capital flows and valuation effects

Slides on stylized facts and current account dynamics

Slides on basics in balance of payments

Slides on international adjustment

a. Stylized facts
b. Intertemporal approach to the current account (theory and empirics)

  • Obstfeld M. and K. Rogoff, Intertemporal Trade and the Current Account Balance, Chapter 1, Foundations of International Macroeconomics, 1996. MIT Press
  • Aguiar, Mark, and Gita Gopinath. 2007. Emerging market business cycles: The cycle is the trend. Journal of Political Economy 115(1): 69-102.

c. External adjustment

2) International prices and exchange rates

Slides Part 1

Slides Part 2

a. Real exchange rates and purchasing power parity

b. The theory and empirics of international prices and exchange rates

3) The international transmission mechanism
a. Review of the Dornbush model


b. Introduction the New Open Economy Macroeconomics