International Economics

International Economics

EC 358 Section 1

International Economics

Fall 2003

BEH 218

MWF 9:30 – 10:20 am

Instructor

Bernard Malamud

Office: BEH 502website:

Phone: 895 – 3294 Fax: 895 – 1354 e-mail:

Office Hours: TR 10:30 – 11:30 am; W 4:30 – 5:30 pm; and by appointment

General Nature of the Course

This course gives an overview of international economic relations today and in the past and offers insights into what can be expected in the future. We use simple economic concepts to study international flows of goods and money. We also examine the consequences of alternative trade policies and of alternative international monetary systems. The principles that we develop are illustrated by episodes of recent history. Throughout the course, we examine international economic issues affecting different parts of the world: economic integration in North America and in Europe; the formation of a common currency area in Europe; trade and investment policies for economic development in Latin America and in Asia; and responses to crises in the international economy. Prerequisites: Junior standing, ECO 202 and ECO 203 (201).

Course Objectives

Upon completion of this course, you will be familiar with the structure of the world economy and with many of the economic issues you may encounter when doing business in different parts of the world. You will understand why nations trade with each other, the sources of gains from trade, and the effects of barriers to trade. You will appreciate the difference that an international monetary system can make: you will learn how fixed and flexible exchange rate systems work and the advantages and disadvantages of alternative exchange rate arrangements.

Text and Supplementary Readings

Text:

  • Robert J. Carbaugh, International Economics, 9th edition, Southwestern Publishing, 2004. This is not much different from earlier editions. If you use an earlier edition of Carbaugh’s textbook, be sure that you are reading assigned material, not just assigned chapter and page numbers.
  • Check the website to an earlier edition of the text and follow the links

Supplements:

  • Professor Roubini’s website: (
  • Wall Street Journal (available at student subscription rates)
  • The Economist (

Examinations and Grading

Three 100 - point classroom exams and a 200 - point comprehensive final will be given this semester. You will be able to rewrite your answer to one question on each classroom exam at home. Your score for the question will be the average of your classroom score and your rewrite score.

Sep 29Classroom Exam, Chapters 1,2,4,5,6 100 points

Nov 3Classroom Exam, Chapters 7,8,9,11,12 100

Nov 26Classroom Exam, Chapters 13 –15 100

Dec 8Comprehensive Final Examination200

Maximum Total Score 500 points

Approximate Grade Distribution

Average Score

(out of 500 points)

90 %Borderline A-

80Borderline B-

70Borderline C-

60Borderline D-

Attendance and classroom participation will affect your final grade.

Makeup Policy

Makeup exams maybe arranged at mutualconvenience if you have a compelling reason to miss a scheduled classroom exam. A makeup exam must be taken before the missed exam is returned to the class. There will be no makeup final exam.

Class Conduct

Your instructor and classmates deserve courtesy. If you must arrive late or leave early, do so quietly. Inform me beforehand if you must leave a class early. Smoking and eating in class are prohibited. Please turn off your cell phones before class begins. Talking to your neighbors in class and reading newspapers and magazines is rude, disruptive, and unacceptable. While this probably need not be said, anyone found engaging in any act of academic dishonesty will be punished in accordance with UNLV policies.

Other Information

If you have a documented disability that may require assistance, you will need to contact the Disability Resource Center (DRC) for coordination in your academic accommodations. The DRC is located in the Reynolds Student Services Complex in Room 137. The DRC phone number is 895-0866 (TDD 895-0652) and

Course Outline

Dates /

Topic/Discussion Problems

Do each “discussion problem” before class. Treat it like homework. While it will not be collected, you will be expected to participate in its discussion. / Chapter in Text
Aug 25,27,29
Sep 1
Sep 3,5,8
Sep 10,12,15
Sep 117,19,22
Sep 24,27
Sep 29
Oct 1,3
Oct 6,8,10
Oct 13,15
Oct 17,20,22
Oct 24,27,29
Oct 31
Nov 3
Nov 5,7,10
Nov 12,14,17
Nov 19,21,24
Nov 26
Nov 28
Dec 1,3
Dec 5
Dec 8 /
Course organization / Overview of the international economy
The economist’s toolbox: Production Possibilities Frontier;
Supply – Demand Analysis
Labor Day Recess
Trade Theory: Comparative advantage and gains from trade/Problem 2-12
Trade Model Extensions: Factor endowments and factor prices/Theory and facts/ Elaboration/S-D import – export model/ Problem 4-13
Tariffs: Varieties/Welfare impacts/Rationales/ Problem 5-15
(Skip large nation model)
Nontariff Barriers: Quotas/OMA/Domestic Content/Subsidy/Rent-Seeking
Classroom Examination: Chapters 1,2,4,5,6
Trade Regulations: From Smoot-Hawley to WTO
Industrial Policies/Strategic Trade Policies/Sanctions/Problem 7 - 13
Trade and Development: Commodity terms of trade/Import substitution vs. export led growth/High performance economies
Regional Trading Arrangements: Varieties/Welfare effects/EU, NAFTA
Balance of Payments/Problem 11-10
Foreign Exchange: Institutions/Arbitrage/Speculation
Problems 12-9,10,11,13
Nevada Day Recess
Classroom Examination: Chapters 7,8,9,11,12
Exchange Rate Determination: Supply – Demand/PPP/Overshooting
Problems 13-7,10 (Skip Forecasting)
Balance of Payments Adjustments: Fixed Rate Systems/Automatic adjustment/Problem 14 –2
Exchange Rates and B. of P./Elasticity approach/J – curve
(Skip Absorption and Monetary Approaches to B. of P.)
Classroom Examination, Chapters 13 – 15
Thanksgiving Recess
Exchange Rate Systems: Fixed – Flex Spectrum/EMU
Catch-up and Review

Comprehensive Final Examination, 8 am – 10 am

/ Chapter 1
Review your Principles text
Chapter 2
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16