The module aims to enable students to obtain a good understanding of international macroeconomic issues and examines national income accounting in an open economy. Students will develop an appreciation of the balance of payments, models of the intertemporal approach to the current account, the foreign exchange market and the interaction between price levels and exchange rates in the long-run. A critical understanding of models of exchange rate determination with flexible prices, fixed prices and sticky prices will be developed. Students will also develop an understanding of the empirical literature on Purchasing Power Parity and on the analysis of trade flows (using the gravity equation framework) at the macroeconomic level.
Principal Learning Outcomes
By the end of the module the student should be able to demonstrate general knowledge and understanding of international macroeconomics; demonstrate a critical understanding of applications of economics that have been specific to the study of international macroeconomics; understand and manipulate simple economic models, and to read critically the empirical literature, in the area of international macroeconomics; apply critical analysis to the topics of the module, formulate concepts and hypotheses, and show how they are tested in relevant literature; review the relevant literature and evidence and write a report based on this review.
The module will typically cover the following topics:
National income accounting in an open economy and in particular the balance of payments
Models of the inter-temporal approach to the current account
The foreign exchange market and the interaction between price levels and exchange rates in the long-run.
Models of exchange rate determination with flexible prices (Monetary Model), fixed prices (Mundell-Fleming Model) and sticky prices (Overshooting Model)
Purchasing Power Parity and the analysis of trade flows (using the gravity equation framework) at the macroeconomic level.
- Optional Module
- LM1D (LLD2) - Year 3, L116 - Year 3, V7ML - Year 3, LA99 - Year 3, L100 - Year 3, L1L8 - Year 3, R9L1 - Year 4, R3L4 - Year 4, R4L1 - Year 4, R2L4 - Year 4, R1L4 - Year 4, V7MP - Year 3, L1P5 - Year 1, L1PA - Year 1, V7MR - Year 3, LM1H - Year 4, GL12 - Year 4, GL11 - Year 3, L103 - Year 4, V7MM - Year 4
- Pre or Co-requisites
- EC201 + EC202 or EC204.
- Not available to non-final year students on Economics-based degrees.
- Part-year Availability for Visiting Students
- Available in the Autumn term only (1 x test – 12 CATS)
- Assessment Method
- Coursework (20%) + 2 hour exam (80%)
- Coursework Details
- One 50 minute test (20%)
- Exam Timing
Time Allowed: 2 hours.
Answer ALL THREE questions in Section A (48 marks) and ONE question from Section B (52 marks). Answer Section A questions in one booklet and Section B questions in a separate booklet.
Approved pocket calculators are allowed.
Read carefully the instructions on the answer book provided and make sure that the particulars required are entered on each answer book. If you answer more questions than are required and do not indicate which answers should be ignored, we will mark the requisite number of answers in the order in which they appear in the answer book(s): answers beyond that number will not be considered.
Previous exam papers can be found in the University’s past papers archive. Please note that previous exam papers may not have operated under the same exam rubric or assessment weightings as those for the current academic year. The content of past papers may also be different.