The most basic text is Mankiw’s Macroeconomics. Krugman and Obstfeld’s International Economics is more applied to open economy issues, i.e., the focus on this course. King and King’s International Economics and International Economic Policy provides more advanced readings on particular topics (i.e., you need to have a strong grasp of the basics to really benefit from these essays).
[Mankiw] = Mankiw, Gregory. Macroeconomics. 6th ed. Worth Publishers, 2006. ISBN: 9780716762133.
[K&O] = Krugman, Paul, and Maurice Obstfeld. International Economics: Theory and Policy. 7th ed. Addison Wesley, 2005. ISBN: 9780321293831.
[K&K] = King, Philip, and Sharmila King. International Economics and International Economic Policy: A Reader. 4th ed. McGraw–Hill/Irwin, 2004. ISBN: 9780072873337.
None of these three texts are required, and you can do well in the course without looking at them. But for people who like to see more about the underlying theory or just to read more, these books are useful.
The matching between book chapters and topics/class sessions is as follows (keeping in mind that there is overlap and in many of our classes we repeat concepts already covered, as a way to build a broader understanding).
| SES # | ASSIGNMENTS | READINGS |
|---|---|---|
| 1 | Global economy | “National Income Accounting and the Balance of Payments.” Chapter 12 in [K&O]. |
| 2 | Longer–run growth |
“Economic Growth I: Capital Accumulation and Population Growth.” Chapter 7 in [Mankiw]. “Economic Growth II: Technology, Empirics, and Policy.” Chapter 8 in [Mankiw]. Rodrik, Dani. “Trading in Illusions.” Chapter 15 in [K&K]. Dollar, David, and Aart Kraay. “Spreading the Wealth.” Chapter 17 in [K&K]. |
| 3 | Development policies | “Developing Countries: Growth, Crisis, and Reform.” Chapter 22 in [K&O]. |
| 3–4 | Internal and external balance |
“Output and the Exchange Rate in the Short Run.” Chapter 16 in [K&O]. “Fixed Exchange Rates and Foreign Exchange Intervention.” Chapter 17 in [K&O]. Kenen, Peter. “Fixed versus Floating Exchange Rates.” Chapter 23 in [K&K]. Cooper, Richard. “Exchange Rate Choices.” Chapter 24 in [K&K]. |
| 4–6 | ISLM model and the money multiplier |
“Money and Inflation.” Chapter 4 in [Mankiw]. “Introduction to Economic Fluctuations.” Chapter 9 in [Mankiw]. “Aggregate Demand I: Building the IS–LM Model.” Chapter 10 in [Mankiw]. “Aggregate Demand II: Applying the IS–LM Model.” Chapter 11 in [Mankiw]. |
| 4–9 | Central banks and currency crises |
Chiodo, Abbigail J., and Michael T. Owyang. “A Case Study of Currency Crisis: The Russian Default of 1998.” Chapter 31 in [K&K]. Moreno, Ramon. “Learning from Argentina’s Crisis.” Chapter 32 in [K&K]. Spiegel, Mark. “Argentina’s Currency Crisis: Lessons for Asia.” Chapter 34 in [K&K]. |
| 7–8 | Theories of short–run exchange rate determination |
“The Open Economy Revisited: The Mundell–Fleming Model and the Exchange–Rate Regime.” Chapter 12 in [Mankiw]. “Aggregate Supply and the Short–run Tradeoff Between Inflation and Unemployment.” Chapter 13 in [Mankiw]. “Exchange Rates and the Foreign Exchange Market: An Asset Approach.” Chapter 13 in [K&O]. “Money, Interest Rates, and Exchange Rates.” Chapter 14 in [K&O]. Hopper, Gregory P. “What Determines the Exchange rate: Market Factors or Market Sentiment?” Chapter 22 in [K&K]. |
| 8 | East Asian financial crisis |
Radelet, Steven, and Jeffrey Sachs. “The Onset of the East Asian Financial Crisis.” Chapter 33 in [K&K]. Moreno, Ramon. “Capital Controls and Emerging Markets.” Chapter 35 in [K&K]. |
