International macroeconomics

The course treats how the conditions of macroeconomic policy in an economy is affected by its degree of openness to international trade and capital movement. The traditional Mundell-Fleming models is used as a basis for analyzing various special cases, e.g. less than perfect capital mobility, fixed vs. floating exchange rates, static vs. rational expectations, the wage rate behavior of unions, etc. Different exchange rate models are discussed and related to the Mundell-Fleming model, e.g. the Dornbusch overshooting model, the portfolio balance model, and the supply-price model. The course also covers current issues of central bank policy, e.g. inflation- or price level targets, as well as how the outcome of the policies of central banks can be evaluated. Instruction is in the form of lectures and seminars.