Dr. Daria Sevastianova, Associate Professor of Economics

ECON349(001): OPEN ECONOMY MACROECONOMICS, Fall 2016[1]

Dr. Daria Sevastianova, Associate Professor of Economics

Romain College of Business

University of Southern Indiana

Office: BEC2039

Phone: (812)465-1677

E-mail:

Lecture:MWF 11:00 – 11:50AM, BE3028

Office Hours:MWF 10 – 11AM & 12 – 1PM and by appointment

Pre-requisites: ECON208 and 209

Course Materials:

MyEconLab with Pearson eText - Standalone Access Card -for International Economics: Theory and Policy, 10 Ed., Paul R. Krugman, Maurice Obstfeld, Marc Melitz
ISBN-10:0133426319
ISBN-13:9780133426311

Description:

The course will start with a general model of an open economy, exchanges rate determination in the long and short run, and various exchange rate regimes. Next, the content will address the history and types of monetary regimes, most important financial crises of the last century, reserve currencies, and challenges to the euro zone.

In addition, throughout the course we will explain and demonstrate the applicability of four key economic ideas:

1. Minsky’s financial cycle
2. The Stolper-Samuelson theorem
3. The Keynesian Multiplier
4. The Mundell-Fleming trilemma

Overview:

Open Economy Macroeconomics will provide students with an analytically rigorous introduction to macroeconomics. Utilizing a uniquely unified, single-model approach, the course will deal with a broad range of policy issues, historic cases, institutions, and specific countries, which allows for an extensive overview of macroeconomics within an international context, and with a strong policy orientation.

Course Objectives:

Upon completion of the course, the students are expected to be able to:

- identify the markets that facilitate international trade of goods and assets;

- explain the role of central banks and private speculators in determine exchange rates

and interest rates;

- describe the effects of international transactions on an open economy;

- explain the role of international economic institutions.

The e-textbook is available from the bookstore and online directly from Pearson. All assignments,quizzes, and exams will be based on the e-textbook readings, materials covered in the lectures, and various supplementary materials. Lecture slides and other materials will be posted on Blackboard as the course progresses.

College of Business Skill Development:

One of the objectives of the course is to develop the following dimensions of the analytical problem solving skill identified by the College of Business:

-identifying and applying relevant concepts and information;

-correctly calculating mathematical operations;

-interpreting results clearly and logically, in a manner consistent with prior analysis.

Grading and Policies:

Course Attendance

Punctual and consistent attendance will be essential to your success in the course and will directly affect your grade. Therefore, your thoughtful participation is also anticipated and will be a key grade component. It is highly recommended that you communicate with the instructor during her office hours, via e-mail, and ask questions whenever timely clarification is necessary.

Communication with Instructor

As appropriate for future professionals and the College of Business etiquette, the instructor ought to be addressed properly in both written and oral communication with her students (“Professor, Professor Sevastianova, Dr. Sevastianova” are all acceptable). Correspondence which fails this rule will not be answered. In addition, e-mail which asks questions already covered in the syllabus will not be returned. It is every student’s responsibility to read and follow the rules described in the course syllabus. Furthermore, I will handle student correspondence in a timely fashion to the best of my ability, and during business hours M-F 9AM-5PM. Under certain circumstances, the instructor will communicate with the entire class via the Blackboard mass e-mail option.

Assignments and Exams

There will be twelve total weekly homework assignments, five online quizzes, two midterm exams, an in-class presentation, and a non-cumulative final exam. Review sessions before exams will be held at students’ request.

• Homework

Homework will be posted in advance on Blackboard and due by midnight every Sunday, with the exception of September 18th, October 23rd, and November 27th. Homework is to be submitted on Blackboard only. You can do so either by typing directly in the window of the homework post, or by attaching a Word document file. Graphs are to be created and submitted using Excel. No exceptions. Late, misplaced, or e-mailed submissions will not receive credit. If you are unable to submit on the due date, please submit early to receive full credit. In addition, the lowest homework score will be automatically dropped from the computation of course grades.

• Quiz

There will be an online quiz every three weeks, for a total of 5 quizzes during the semester. Every quiz will be available on Blackboard for three days, i.e. over the weekend and due by midnight on Sunday. In addition, the lowest quiz score will be automatically dropped from the computation of course grades.The online quiz due dates are September 11th, October 2nd and 23rd, November 13th, and December 4th.

• Exams

The first exam will be administered in class on September 23rd, the second exam will be on October 28th. The final exam date is December 14th, 11AM – 1PM. Each exam will take place in the assigned classroom. Review sessions before exams may be held at the students’ request.

• In-Class Presentation

The presentations will take place in the classroom during the two last class periods, December2nd&5th. Each speaker is encouraged to use media and visual aids, and aim at the total presentation duration of 10 minutes. Following the presentation, the students and instructor will ask questions based on the content. The suggested list of topics is attached at the end of the syllabus, but additional topics are possible upon instructor’s approval. Failure to be ready on the day of presentation will result in the score of “zero”.

Dates and Deadlines

Although we all face unexpected circumstances from time to time, every student is expected to observe deadlines and submit all assignments in a timely fashion. Moreover, while the instructor will be happy to clarify missed material during her office hours, it is the student’s responsibility to obtain notes from missed class. A missed homework/assignment/quiz/ will earn the score of “zero”.

If you have an excused and documented absence which prevents you from attending class on the date when homework is due, you will have to turn it in early to assure proper credit, along with supporting documentation. No late assignments will be accepted.

Make-ups

There are no make-ups in this course, i.e. missed examinations may not be made up. In the event you miss an exam, the point value of that exam will be added to your final exam. Exception: missing a second mid-term exam results in a zero for that exam.You cannot miss the final examination.

Grade Appeals

Should there arise a grading dispute (particularly over an exam), you are to submit a well-substantiated explanation in writing for the instructor’s review. Should there be a simple algebraic miscomputation of your score, it will be corrected immediately.

In addition, one lowest homework score and one lowest quiz score will be automatically dropped from your course grade computation. If your exam scores show improvement from one score to the next, the first (lowest) exam score will also be dropped from your course grade computation, thereby adding its weight to the second midterm. This opportunity, however, only applies if you took all three exams.

Course Grade Components

Various parts of your grade shall be weighted as follows:

Participation/Attendance: 10%

Quiz: 10%

Homework Assignments: 10%

Midterm 1: 20%

Midterm 2: 20%

In-Class Presentation: 10%

Final: 20%

Lecture Topics Outline:

I. Foundations (August 22 – September 21, 2016)

Midterm1 – September 23, 2016

Krugman & Obstfeld / Topic
Chapter 13 / National Income Accounting and the Balance of Payments
Chapter 14 / Exchange Rates and the Foreign Exchange Market: An Asset Approach
Chapter 15 / Money, Interest Rates, and Exchange Rates
Chapter 16 / Price Levels and the Exchange Rate in the Long Run
Chapter 17 / Output and the Exchange Rate in the Short Run
Chapter 18 / Fixed Exchange Rates and Foreign Exchange Intervention

II. From Fixed to Floating Exchange Rates: the Classical Gold Standard, Bretton Woods System, and Fiat Money(September 26 – October 26, 2016)

Midterm 2 – October 28, 2016

Krugman & Obstfeld / Topic
Chapter 19 / International Monetary Systems: An Historical Overview
Chapter 20 / Financial Globalization: Opportunity and Crisis
Chapter 21 / Optimum Currency Areas and the Euro

III. Financial Crises: History and Lessons (October 31 – December 5, 2016)

Final – December 14, 2016

Krugman & Obstfeld / Topic
Chapter 22 / Developing Countries: Growth, Crisis, and Reform
Supplementary Materials / Latin American Crisis of the 1980s
Supplementary Materials / Asian Crisis of the late1990s
Supplementary Materials / The Global Financial Crisis 2007-2009
Supplementary Materials / The Euro Crisis
Supplementary Materials / Financial crisis prevention
Supplementary Materials / Choosing the Exchange Rate Regime and Financial Integration
Supplementary Materials / G-7 policy coordination and current global challenges

Suggested Presentation Topics:

1. US-China Trade Relations

2. Emerging Economies: BRICs, N-11, and Beyond

3. EU Debt and Immigration Challenges and the Future of the Euro Zone

4. The Future of the U.S. Dollar

5. G-7 and The Future of the World Economic Order

6. Trans-Pacific Partnership

7. Transatlantic Trade and Investment Partnership

8. The Global Reserve Currency

9. Russia’s geopolitical ambitions

10. The future of NATO

Academic Integrity:

Academic dishonesty, such as plagiarism and cheating will be subject to disciplinary action as outlined in the USI Bulletin and the University Handbook, and will result in course failure, and possible dismissal from your degree program and the university.

Students with Disability:

If you have a disability for which you may require academic accommodations for this class, please register with Disability Resources (DR) as soon as possible. Students who have an accommodation letter from DR are encouraged to meet privately with course faculty to discuss the provisions of those accommodations as early in the semester as possible. To qualify for accommodation assistance, students must first register to use the disability resources in DR, Science Center Rm. 2206, 812-464-1961,. To help ensure that accommodations will be available when needed, students are encouraged to meet with course faculty at least 7 days prior to the actual need for the accommodation. However, if you will be in an internship, field, clinical, student teaching, or other off-campus setting this semester please note that approved academic accommodations may not apply. Please contact Disability Resources as soon as possible to discuss accommodations needed for access while in this setting.

Title IX:

USI does not tolerate acts of sexual misconduct, including sexual harassment and all forms of sexual violence. If you have experienced sexual misconduct, or know someone who has, the University can help. It is important to know that federal regulations and University policy require faculty to promptly report incidences of potential sexual misconduct known to them to the Title IX Coordinator to ensure that appropriate measures are taken and resources are made available. The University will work with you to protect your privacy by sharing information with only those who need to know to ensure we can respond and assist. If you are seeking help and would like to speak to someone confidentially, you can make an appointment with a counselor in the University Counseling Center. Find more information about sexual violence, including campus and community resources at

[1]Each student is responsible for knowing the contents of the syllabus, understanding, and following the course policies outlined therein. By enrolling in the course, you explicitly consent to the syllabus.