390038 UK PhD-E: International Macroeconomics (2011S)

International Financial Markets

Summer semester 2010

Alejandro Cuñat
E-mail: alejandro.cunat@univie.ac.at
Office: Hohenstaufengasse 9/201.
Office hours: by appointment

Textbooks:

The course will be based strongly (but not exclusively) on the following textbook:

Obstfeld, M. and K. Rogoff (1996): Foundations of International Macroeconomics, MIT Press. (OR)

Other sources, useful for those lacking an International Economics background, but inadequate by themselves are:

Appleyard, D. and A. Field (1995): International Economics, McGraw-Hill.

Krugman, P.R. and M. Obstfeld (1997): International Economics, Addison-Wesley.

Topic 1: The Current Account

Dixit, A.K. (1993): The Art of Smooth Pasting, Harwood Academic Publishers, pp. 1-9.

Dixit, A.K. and R.S. Pindyck (1994): Investment under Uncertainty, Princeton University Press, Chapter 3.

Gourinchas, P.O. and H. Rey (2007): �International Financial Adjustment,� Journal of Political Economy, Vol. 115, No. 4.

Jin, K. (2009): �Industrial Structure and Financial Capital Flows,� manuscript, LSE.

Kraay, A. and J. Ventura (2000): �Current Accounts in Debtor and Creditor Countries,� Quarterly Journal of Economics, 115: 1137-1166.

Kraay, A. and J. Ventura (2003): �Current Accounts in the Long and the Short Run,� NBER Macroeconomics Annual 2002: 65-94.

OR: chapters 1-3.

Topic 2: Uncertainty and International Financial Markets

Cuñat, A. and C. Fons-Rosen (2008): �Relative Factor Endowments and International Portfolio Choice,� CEP Discussion Paper #879.

Kalemli-Ozcan, S., B.E. Sorensen, and O. Yosha (2003): �Risk Sharing and Industrial Specialization: Regional and International Evidence,� American Economic Review, 93, 903-918.

Lane, P. and G.M. Milesi-Ferretti (2008): �International Investment Patterns,� Review of Economics and Statistics, 90(3), 538-549

OR: chapters 5, 7.

Obstfeld, M. and K. Rogoff (2001): �The Six Major Puzzles in International Macroeconomics. Is There a Common Cause?� NBER Macroeconomics Annual 2000.

Topic 3: Imperfections in Capital Markets

Antràs, P. and R. Caballero (2009): �Trade and Capital Flows: A Financial Frictions Perspective,� Journal of Political Economy, 117(4), pp. 701-744.

Barro, R.J. and X. Sala-i-Martin (1999): Economic Growth, 2nd Edition, MIT Press, chapter 3.

Broner, F., A. Martin, and J. Ventura (2009): �Sovereign Risk and Secondary Markets,� American Economic Review, forthcoming.

Matsuyama, K. (2004): �Financial Market Globalization, Symmetry-Breaking and Endogenous Inequality of Nations,� Econometrica.

OR: chapter 6.

Topic 4: Business Cycles

Backus, D., P. Kehoe, and F. Kydland (1992): �International Real Business Cycles,� Journal of Political Economy, 101: 745-775.

Ghironi, F. and M.J. Melitz (2005): �International Trade and Macroeconomic Dynamics with Heterogeneous Firms,� Quarterly Journal of Economics, Vol. 120, August, pp. 865-915.

Kraay, A. and J. Ventura (2007): �Comparative Advantage and the Cross-section of Business Cycles,� Journal of the European Economic Association, December.

OR: chapter 7.

Topic 5: Money and Exchange Rates under Flexible Prices

OR: chapter 8.

Stockman, A. (1987): �The Equilibrium Approach to Exchange Rates,� Federal Reserve Bank of Richmond Economic Review, March/April: 12-30.

Topic 6: Sticky-Price Models

Corsetti, G. and P. Pesenti (2001): �Welfare and Macroeconomic Interdependence,� Quarterly Journal of Economics, 116: 421-445.

Lane, P. (1999): �The New Open Economy Macroeconomics: A Survey,� Journal of International Economics.

OR: chapters 9, 10.

Topic 7: Currency Crises

M. Angeletos, C. Hellwig, and A. Pavan (2007): �Dynamic Global Games of Regime Change: Learning, Multiplicity and Timing of Attacks,� Econometrica 75:3, May.

Broner, F. (2008): �Discrete Devaluations and Multiple Equilibria in a First-Generation Model of Currency Crises,� Journal of Monetary Economics, 55(3): 592-605.

Chang, R. and A. Velasco (2001): �A Model of Financial Crises in Emerging Markets,� Quarterly Journal of Economics, May: 489-517.

Corsetti, G., P. Pesenti, and N. Roubini (1999): �Paper Tigers? A Model of the Asian Crisis,� European Economic Review, 43: 1211-1236.

Martin, P. and H. Rey (2006): �Globalization and Emerging Markets: with or without Crash?� American Economic Review, Vol. 96, Number 5, pp. 1631-1651.

Morris, S. and H.S. Shin (1998): �Unique Equilibrium in a Model of Self-fulfilling Currency Attacks,� American Economic Review, Vol. 88, pp. 587-597.

(A correction to Theorem 2 of this paper is provided by Frank Heinemann (2000): �Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks: Comment,� American Economic Review.)

OR: chapters 8, 9.