BCRP Summer Course - International Macroeconomics

Philippe Bacchetta (University of Lausanne)

January 23-27 2012

Course description

The purpose of the course is to provide a perspective on some major topics in

international macroeconomics. The focus is on theoretical analysis, but empirical
evidence and policy issues will also be discussed. The course starts with the
standard intertemporal approach to the current account and extends it in various
directions to examine issues like global imbalances, international risk sharing, real
exchange rate determinants, sovereign debt, or the recent financial crisis.

Course Materials

The main reference book is Maurice Obstfeld and Kenneth Rogoff, Foundations of
International Macroeconomics , MIT Press, 1996. Lectures will extensively use
slides that will be made available online.

1. Balance-of-Payments and Global Imbalances

Serven, L. and H. Nguyen, (2010), "Global imbalances before and after the global
crisis," Policy Research Working Paper Series 5354, The World Bank.

2. The Basic Two-Period Model

Obstfeld, M., and K. Rogoff, Foundations of International Macroeconomics , MIT

Press, 1996, chapter 1.

3. The Infinite Horizon Model

Obstfeld, M., and K. Rogoff, chapter 2.

4. The Real Exchange Rate

Obstfeld, M., and K. Rogoff, 4.4

1
5. Sovereign Risk

Vegh, C., ch. 2, section 4 of Manuscript of Open Macro in Developing Countries

Obstfeld, M., and K. Rogoff, 6.1

6. Uncertainty and International Risk Sharing

Obstfeld, M., and K. Rogoff, 5.1, 5.2.1

Vegh, C., Chapter 2

7. Credit Market Imperfections

Obstfeld, M., and K. Rogoff, 6.4

Aghion, Ph., Ph. Bacchetta, and A. Banerjee (2004), “Financial Development and the
Instability of Open Economies,” Journal of Monetary Economics 51, 1077-1106.

Schedule

Monday 23: Balance of Payments and basic two-period model

Tuesday 24: Extensions two-period model and infinite horizon model
Wednesday 25: Real exchange rate and sovereign risk
Thursday 26: Uncertainty and international risk sharing
Friday 27: Credit market imperfections