International Economic Issues

Number of credits allocated: 6 ECTS Credits

Objective of the course (expected learning outcomes and competences to be acquired)

Upon successful completion of the course, students will be able to:

a. Have developed a set of analytical tools and be able to apply these to interpret and address issues of open-economy macroeconomic analysis.
b. Describe and analyze the underlying balance of payments accounts and how the net investment position of a country is measured.
c. Understand key determinants of the current account balance, and analyze the effects of such disturbances in the adjustment process of the current account and on international capital movements.
d. Evaluate the deficits / surpluses of balances, analyzing the conditions under which they can be considered desirable and/or optimal.
e. Describe how to measure trade and/or financial integration and their significance for the globalization process.
f. Evaluate the key determinants behind the process of trade integration of countries and explain how this process changes over time.
g. Understand why some countries are clearly more financially integrated than others, and explain the factors behind the differences.
h. Explain and also measure the potential effects (benefits and/or costs) of the globalization process on prosperity.

Prerequisites: There are no formal prerequisites, but it is recommended that students have a sound knowledge of microeconomics, macroeconomics, econometrics and international economics.

Course contents

The following topics are covered:

1. Introduction: Global Financial Markets (Financial Integration and Globalization, International Diversification and Shock Transmission through Financial Markets)
2. Balance of Payments Accounting (National Account Identities and Measuring Wealth in Open Economies, The asset market approach in determining the nominal exchange rate).
3. Current Account Balance: Key Determinants (Solvency and the current account, Small Open Economies: adjustment to permanent and transitory shocks, Uncertainty and the current account, Equilibrium with production)
4. Global Imbalances (Global imbalances and the current account, Global imbalances and the global financial crisis, International adjustment dynamics, Imbalances of the Eurozone countries).
5. Exchange Rate Regimes and Central Bank Intervention (The trilemma of monetary policy, Fiscal policy under fixed exchange rates, Balance of payments crises).
6. Global Financial Crises (Financial crises and balance sheet effects, (National) Debt crises, Bubbles in international markets and market collapse).

Recommended reading

• Krugman, P.R., Obstfeld, M. και Melitz, M. (2023) Διεθνής Οικονομική: Θεωρία και πολιτική (5η έκδοση, ΚΡΙΤΙΚΗ)
• Schmitt-Grohé, S., Uribe, M. and M. Woodford (2022). International Macroeconomics: A Modern Approach, Princeton University Press (στα αγγλικά).

Teaching methods: Lectures and essay presentations

Assessment methods: Final written exam (70%), essay (30%)

Language of instruction: Greek, English