The Balance of Payments: Equilibrium and Adjustment (Wed., Jan. 18-Mon., Jan. 30)EXAMINATION1 Kansas State University Department of Economics Advanced International Economics (International Economic Policy) Economics 823 Spring 2006 E. W. Nafziger ([email protected]) 8:05-9:20 MW, Waters 329 Office hours: 11:30-12:20 MWF, or appointment - Waters 312. I will calculate your semester grade by weighing the mid-term examination one unit, your class presentations based on a research paper (see last section) one unit, and your final examination one unit (old exams are at http://www.ksu.edu/economics/nafwayne/class.htm) (KSU computing ID and password required). Additionally, I will raise your semester numerical score if you make an excellent contribution to class. RELATIONSHIP OF THE COURSE TO OTHER INTERNATIONAL ECONOMICS COURSES The prerequisite for this course is Economics 681 or equivalent. The course does not cover the same ground as, but is complementary to, International Economics (Economics 681), International Trade Theory and Policy (Economics 981), and International Markets and Agricultural Trade (Agec 840). The major objective of the course is to help students acquire an analytical framework to examine contemporary international economic issues, such as the global (especially Asian, Latin, and Russian) financial crisis, international adjustment and reform in developing and transitional economies, trade and income distribution, the international monetary system, exchange rates, trade and agricultural subsidy policies, IMF reform, regional economic integration, and the U.S. balance of payments problem. The goal is to provide students with the background, experience, and tools for future analysis of international economic problems and policies. REQUIRED MONOGRAPHS Economics 823: Advanced International Economics, Spring 2006. Eisenhower 11 (Eis) packet. Morris Goldstein, Managed Floating Plus (Washington, D.C.: Institute for International Economics, 2002). ISBN 0-88132-336-5 (www.iie.com/ or bookstore for this & below). Michael Mussa, Argentina and the Fund: From Triumph to Tragedy (Washington, D.C.: Institute for International Economics Analyses in IE 67, July 2002). ISBN 0-88132-339-x. William R. Cline, Trade and Income Distribution (Washington: IIE, 1998). ISBN 0-88132-216- 4. Pdfs off the internet, including Economic Report of the President 2005, Mann on sustainability of2the U.S. current account, and Mann on globalization of IT services and white-collar jobs.. PLAGIARISM Plagiarism: University policy is: “Plagiarism and cheating are serious offenses and may be punished by failure on the exam, paper, or project; failure in the course; and/or expulsion from the university.” For more information refer to “Academic Dishonesty,” http://www.ksu.edu/uauc/fhbook/fhxf.html. REQUIRED READING ASSIGNMENTS (also www.ksu.edu/economics/nafwayne/csyllabi.htm) The Balance of Payments: Equilibrium and Adjustment (Wed., Jan. 18-Mon., Jan. 30) Peruse U.S. President, Council of Economic Advisors, Economic Report of the President, 2005, pp. 3-5, 31-48, 93-116, 173-188, peruse appendix with emphasis on statistics on the U.S.’s international position. Also available at govt publications office, Hale Library, 3rd floor, for Mon., Jan. 23. Lecture will focus on meaning and concepts pertaining to the balance of payments, especially that of the US. C.L. Mann, “The US Current Account, New Economy Services, and Implications for Sustainability,” Review of International Economics 2005, http://www.iie.com/publications/papers/mann0104.pdf C.L. Mann, “Globalization of IT Services and White Collar Jobs,” International Economics Policy Brief PB03-11, Washington, D.C.: Institute for International Economics, December 2003, http://www.iie.com/publications/pb/pb03-11.pdf The Global Financial Crisis M. Mussa, Argentina and the Fund: From Triumph to Tragedy (Washington, D.C.: IIE 67, 2002) F.S. Mishkin, “Global Financial Instability: Framework, Events, Issues,” JEP 13(4): 3-20, Eis 7- 24. The International Monetary System, Exchange Rates, and Reform of the IMF S. Fischer, “Globalization and Its Challenges,” AER 93(2) (2003): 1-30, Eis. 25-40. A.O. Krueger, “Sovereign Debt Restructuring: Messy or Messier?” AER 93(2) (2003): 70-74, Eis 41-43. M. Goldstein, Managed Floating Plus (Washington, D.C.: IIE, 2002). M. Friedman, "The Case for Flexible Exchange Rates," AEA, Readings, pp. 413-37, Eis. 44-56. S. Fischer, “Exchange Rate Regimes: Is the Bipolar View Correct,” JEP 15(2) (2001): 3-24 (or http://www.imf.org/external/np/speeches/2001/010601a.htm). J.E. Stiglitz, “Capital Market Liberalization, Economic Growth, & Instability,”WD 28:1075-86, Eis 57-68. S.Edwards, “How Effective are Capital Controls?” JEP 13(4) (1999): 65-84, Eis. 69-88. G. Caprio & P. Honohan, “Restoring Banking Stability: Beyond Supervised Capital3 Requirements,” JEP 13(4) (1999): 43-64, Eis. 89-110. S. Fischer, “On the Need for an International Lender of Last Resort,” JEP 13 (1999): 85-104, Eis 111-30. P.S. Mistry, “Coping with Financial Crises: Are Regional Arrangements the Missing Link?” in United Nations Conference on Trade and Development (UNCTAD), International Monetary and Financial Issues for the 1990s, X (Geneva, 1999), pp. 93-116, Eis. 131-154 (Ap 5). Stabilization, Debt, and Reform in Developing Countries J.D. Sachs, “External Debt, Structural Adjustment, and Economic Growth,” in UNCTAD, International Monetary and Financial Issues for the 1990s, IX (Geneva, 1998), pp. 45-55, Eis. 155-265. EXAMINATION Trade Policy and Global Poverty (or Trade and Income Distribution) W.R. Cline, Trade and Income Distribution) (IIE, 1998). D. Rodrik, “Why is Trade Reform so Difficult in Africa,” JAE 7 (1998): 43-69, Eis. 166-179. The EU, NAFTA, and APEC: The Effect of Regional Trading Blocs A.O. Krueger, “Are Preferential Trading Arrangements Trade-Liberalizing or Protectionist?” JEP 13 (1999): 105-124, Eis. 180-199 J.A. Frankel & D. Romer, “Does Trade Cause Growth?” AER 89(3) (1999): 379-399, Eis. 200- 220. H.Faruqee, “Euro Turns Five: Europe’s Grand Experiment, Finance and Development 41(2) (June 2004): 14-15. www.imf.org/external/pubs/ft/fandd/2004/06/index.htm Class Presentations (tentatively Wed., Apr. 26-Wed., May 3) FINAL EXAMINATION, Friday, May 12, 2006,, 11:50-1:40, in Waters 329 Lecture material not