International Macroeconomics

Name of the Faculty: Chetan Subramanian

Designation: Professor

Teaching Area: Economics (ESS)

(such as Finance & Accounting; Marketing; Production &
Operations Management; Strategy)

This course may be offered to: PG Programmes

(PG Programmes / Doctoral Programme)
http://www.iimb.ernet.in/programmes

Credits (No. of hours): 3

(3 credits=30 classroom hours; 1.5 credits-15 classroom
hours; session=90 minutes)

Term / Quarter: June (Term 4)

(Starting April /June /September/December)

Course Type: Elective

(Core or Elective)

Offered as: Regular

(Regular Course: staggered across the term or
Workshop1 Course: 3-5 continuous days)
Are there any financial implications to No
this course?
o Profile of the guest / adjunct faculty teaching in the course.
o If there are more than one faculty teaching, please mention
Additional information required the no. of sessions allocated for each faculty.

1
Workshop course: Please provide reasons as to why the course is being offered in workshop mode and why it cannot be offered
as a regular course (that is spread over 10 weeks). As an institution, IIMB prefers courses offered in the regular mode, since it
results in better learning experience for the students and avoids overlapping of courses.

Degree/Diploma Granting Programmes: Template for proposing new course outlines_v2019_Internal Faculty
Course Summary
This course reviews selected topics in international finance and open-economy macroeconomics.
Topics include national income accounts, balance of payments adjustments, models of exchange
rate determination, macroeconomic stabilization policies under fixed and flexible exchange rates,
empirical regularities of international prices, balance of payments crises, currency unions and
debt crises. The course will also discuss various recent policy debates.

Learning Objectives / Outcomes

The course is designed with the following specific objectives and learning outcomes:

a. Understand the macroeconomic and financial linkages between countries.

b. Evaluate the macroeconomic impact of capital flows and exchange rate fluctuations
c. International monetary system
d. Understanding exchange rate and sovereign debt crisis

Pedagogy
The instruction is lecture based. The class would meet twice a week for a total of three hours and
there would be twenty such sessions. Lecture slides will be made available before every class

Textbooks:
 International Finance Theory and Policy, Tenth Edition, Paul R. Krugman, Maurice
Obstfeld, Marc Melitz (KOM), Pearson Publisher (Required)

 International Macroeconomics by Robert C. Feenstra, Alan M. Taylor, Worth Publishers (

Copy will be made available in the library)

Course Evaluation & Grading Pattern

Grading will be based on:

Midterm 30%
Group Presentation 20%
Final 50%

Attendance Policy: As per institute norms.

Degree/Diploma Granting Programmes: Template for proposing new course outlines_v2019_Internal Faculty
Session-wise plan
Sessions Module Topic Readings
1-3 National income  Review of National  Class notes
accounts and Income Accounts  KOM Chapter 2
Balance of  Balance of Payments  FT, Chapter 17
payments  Issues related to  “Twenty Five Years of Global
Globalization Imbalances” (2018), Maurice
Obstfeld CEPR Discussion Paper No.
DP13066

4-7 Exchange rates  The Foreign Exchange  KOM 3,4,5

Market
 Money and Exchange
Rates in the Short-Run
 Money and Exchange
Rates in the Long-Run:
 Exchange Rate
Overshooting
 Purchasing Power Parity
 The Real Exchange Rate
 Exchange rate
Derivatives
 FT Chapters 13-15
 Class Notes
 Taylor, Alan M. and Mark P. Taylor.
2004. “The Purchasing Power Parity
Debate.” Journal of Economic
Perspectives. 18(4). 135-58.
 Obstfeld, Maurice and Rogoff,
Kenneth. “The Six Major Puzzles in
International Macroeconomics: Is
There a Common Cause?” NBER
Working Paper no. 7777. July 2000.
Esp. 33-41.

8-10 Output, Prices  Output and Exchange  KOM Chapter 6

and Exchange
Rate Determination in
rate in the Open
 FT, Chapters 18
Economy the Short-Run
 Flexible Exchange Rates  Class Notes
 Fixed Exchange Rates
 Abelal, Rawi, and Laura Alfaro.
 Capital controls "Capital Controls." Harvard
Business School Case. Harvard
Business School Publishing. Case: 9-
702-082.

Degree/Diploma Granting Programmes: Template for proposing new course outlines_v2019_Internal Faculty
 11-13 International  The Gold Standard, The  KOM, Chapter 8
Macroeconomic Bretton Woods System  FT, Chapter 10
Policy  The Theory of Optimum  Class notes
Currency Areas
 The Gains From
International Capital
Mobility

14-16 Balance of  What is an exchange  KOM, Chapter 7

payment crisis rate crisis  FT-Chapter 20
 First-Generation
 Class Notes
Models: Inconsistent
Fiscal Policy  Di Tella, Rafael, and Ingrid Vogel.
 Second-Generation
"2001 Crisis in Argentina: An IMF-
Models: Contingent
monetary polices Sponsored Default? (A)." Harvard
Business School Case. Harvard
Business School Publishing. Case: 9-
704-004, October 27, 2003.
 Alfaro, Laura, Rafael Di Tella, and
Renee Kim. "Chronology of the
Asian Financial Crisis." Harvard
Business School Case. Harvard
Business School Publishing. Case: 9-
708-001, February 8, 2008.

17-18 Sovereign Debt  European debt crisis  Alfaro, Laura, and Renee Kim. "The
crisis First Global Financial Crisis of the
21st Century." Harvard Business
School Case. Harvard Business
School Publishing. Case: 9-709-057,
April 7, 2009
 The Greek Crisis: Tragedy or
Opportunity? HBS, Dante Roscini,
Jonathan Schlefer, Konstantinos
Dimitriou, Product number: 711088
 The Euro in Crisis: Decision Time at
the European Central Bank, Gunnar
Trumbull, Dante Roscini, Diane
Choi, HBS, Case # 711049

19-20 Presentations

Degree/Diploma Granting Programmes: Template for proposing new course outlines_v2019_Internal Faculty