Learning objectives
The students will learn the main tools of the analysis of international trade and exchange rate, will acquire the ability to understand the dynamics and the influence on them of trade policy. He/she will learn the determinants of the dynamics of public debt, acquire the ability to assess the factors that cause stability or instability. He/she will know how to evaluate the effectiveness of economic policy under a regime of perfect capital mobility with fixed and flexible exchange rates. The student will also be able to analyze the supply and demand determinants that generate economic growth in the long run.
At the end of the course, students will have acquired:
Applying knowledge and understanding
• Acquisition of specialized tools for macroeconomic analysis of intermediate and advanced macroeconomic models.
• Acquisition of the basic tools for assessing the impact of interventions of fiscal and monetary policy and trade policy.
Making judgments
• Ability to assess the conclusions and results of macro-economic analysis and the effects of alternative economic policy actions and interventions.
• Ability to distinguish between competing theories of production, growth and distribution;
Communication skills
• Ability to present and explain the results in a critical form of macroeconomic studies, the implications of different policy choices and scenarios described by the economic statistics is to be qualified persons to non-experts.
Ability to learn
• Ability to explain complex topics in a concise manner through the use of graphs and mathematical formulas.
Prerequisites
Course unit content
The course is divided into two parts. The first part is lectured by prof. Mario Menegatti and the second part is lectured by Prof Ettore Gallo.
The first part examines: 1) The balance of payments and the relationship between different economies 2) international trade and exchange of goods between economies, with a focus on Ricardo, Heckscher, Ohlin 3) The New Economic Geography 4) Exchange rate, prices, interest rate and currency areas 5) Trade policy 6) The long-term stability of public debt.
The topics covered in the second part are:
1) Balance of payments, exchange rates and capital mobility; 2) Perfect capital mobility under fixed and flexible exchange rates: the Mundell-Fleming model; 3) The long run: growth data and competing theories of production, growth and distribution; 4) Growth theory: (in)stability of the Harrod-Domar model; 5) Economic growth and endogenous technological progress; 6) Demand-led growth theory: neo-Keynesian models and the Cambridge solution; 7) Demand-led growth theory: the role of autonomous components of aggregate demand
Full programme
The topics covered in the second part are:
1) Trade balance, exchange rates and capital mobility;
Required readings: Dornbusch et al. (2020, sect. 7.1 - 7.2 - 7.3 - 7.4)
2) Perfect capital mobility under fixed and flexible exchange rates: the Mundell-Fleming model;
Required readings: Dornbusch et al. (2020, sect. 7.5 - 7.6)
3) The long run: growth data and competing theories of production, growth and distribution;
Required readings: Handouts (ch. 1), Dornbusch et al. (2020, sect. 16.1)
Optional readings: Blecker and Setterfield (2019, ch. 1), Hein (2014, ch. 1)
4) Growth theory: the stability problem in the Harrod-Domar model;
Required readings: Handouts (ch. 2), Dornbusch et al. (2020, sect. 16.2)
Optional readings: Blecker and Setterfield (2019, sect. 3.1-3.2), Hein (2014, ch. 2)
5) Economic growth and endogenous technological progress;
Required readings: Dornbusch et al. (2020, sect. 16.4)
Optional readings: Hein (2014, sect. 3.5)
6) Demand-driven growth theory: neo-Keynesian models and the Cambridge solution;
Required readings: Handouts (ch. 3, EXCLUDING SECTION 3.3.1), Dornbusch et al. (2020, sect. 16.3.4)
Optional readings: Blecker and Setterfield (2019, sect. 3.3-3.4), Hein (2014, ch. 7)
7) Demand-led growth theory: the role of autonomous components of aggregate demand;
Required readings: Handouts (ch. 4, EXCLUDING SECTION 4.2.1)
Optional readings: Blecker and Setterfield (2019, sect. 7.5), Gallo (2022, sect. 1-2), Hein (2023, sect. 7.9)
Bibliography
De Arcangelis G. “Economia Internazionale”, Mc Graw-Hill,ed. 017 chapters 3,5,6,10,13,14,15 , 16, 17, 18
Menegatti M. e Seravalli G. “La New Economic Geography e lo sviluppo locale”, Working paper n.5/2004 Economia e Politica economica del Dipartimento di Economia della Facoltà di Economia (available in Elly)
-Blanchard O. “Scoprire la macroeconomia vol. 2”, Il Mulino, ed. 2011, chapters 3.1, 3.2 e 8 –
Blanchard O. “Scoprire la macroeconomia vol. 2”, Il Mulino, ed. 2003, chapter 7.2 –
Required readings (2nd part):
R. Dornbusch, S. Fischer, R. Startz, Canullo G., Pettenati P. (2020), Macroeconomia, XII edizione, McGraw-Hill.
Handouts on growth theory (uploaded on Elly)
Optional readings (2nd part):
Hein, E. (2014) Distribution and Growth after Keynes, Cheltenham: Edward Elgar Publishing Limited;
Blecker, R. A., & Setterfield, M. (2019). Heterodox macroeconomics: models of demand, distribution and growth. Edward Elgar Publishing.
Gallo, E. (2022). When is the long run? - Historical time and adjustment periods in demand‐led growth models. Metroeconomica, 73(4), 1155-1178. (uploaded on Elly)
Teaching methods
• Knowledge and understanding: lectures
• Applying knowledge and understanding: examples applied to real economic problems
• Making judgements: during this module, students will be encouraged to identify strengths and weaknesses of the main economic theories and their usefulness in real world applications
• Learning skills: each topic will be addressed first, explaining the problem to be solved, and then critically analyzing the adopted solutions
• Communication skills: the teacher will illustrate
the meaning of the most common terms used by the economic community.
Assessment methods and criteria
Written exam.
The exam will consist of 6 open-ended questions (3 for the first part of the course and 3 for the second one). The student will answer 4 questions (2 for the first part of the course and 2 for the second part)
The acquisition of knowledge and technical language will be assessed by the answers to the theoretical sections of the questions. The ability to apply the knowledge and learning skills will be evaluated in the application and in the treatment of specific cases and problems. Making judgement will be evaluated in the explanation and comments of cases analyzed.
Beyond traditional exam rounds, we will provide a partial exam after each part of the course. Each partial exam will be on the program of the specific part of the course just concluded. In this case the grade will be obtained computing the average between the grades obtained in the two partial exams.
Other information
