ECON 220: International Economics Principles

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1 ECON 220: International Economics Principles University of Illinois at Urbana- Champaign College of Liberal Arts & Sciences Department of Economics Luiz Felipe Leite Estanislau do Amaral Fall David Kinley Hall Mondays/ Wednesdays, 1:00pm- 2:20pm Communication: Office: 17 David Kinley Hall E- mail: Office Hours: Monday 11:00am- 12:00pm Tuesday 11:00pm- 12:00pm Friday 3:30pm- 4:30pm Or by appointment Catalog Description: Principles- level course in international economics for non- majors. The first half of course, international trade, covers such topics as comparative advantage, protectionism (tariff and nontariff), impact on income distribution, and industrial policies. The second half, international finance, covers topics such as balance of payments, exchange- rate determination, currency crises, dollarization, and macroeconomic policy in an open economy. Issues relating to globalization will be covered in both halves. (3 Hours) Prerequisite: ECON 102. Course Description: This is a principles- level course in international economics for non- majors. International economics is the area of economics concerning transactions and interactions between agents (consumers, firms and governments) of different countries. The main goal is to introduce students to general principles of both international microeconomics and international macroeconomics. The first part of the course deals with international microeconomics and focuses on international trade. Initially, we will see the main theories explaining international trade: who benefits from trade, why certain trade patterns appear, how is international trade related to income distribution, etc. Then, we will focus on international trade policy: what are the instruments to encourage or discourage trade, why is trade not as prevalent as the theory would imply, and what are the main arguments for and against free trade. The second part of the course will focus on international macroeconomics, or open economy macroeconomics. It will go over exchange rate determination, the interaction between exchange rates, interest rates, inflation, and aggregate output; and discuss international monetary systems and optimal currency areas. Page 1 of 6

2 Course Format: The course will be comprised of biweekly lectures. Course Objectives: Introduce students to principles in international economics. Provide a basic understanding of the workings of international trade and international finance. Develop economic reasoning. Learning Resources: Required: Krugman, Obstfeld, Melitz. International Economics: Theory and Policy, 10 th Edition, Pearson. (Earlier editions are acceptable, the online platform will not be used). Student Assessment: Scoring Attendance - 50 Total Points Homework Assignments Total Points Paper Assignment Total Points Exam Total Points Exam Total Points Final Exam Total Points Your grade will be calculated as a percentage of these points. The final grade for the class will be scored out of 1,000 points. To calculate your grade before all exams and assignments are finalized, divide the total points you have scored in the course so far by the total amount of potential points. Multiply that number by 100 and round to the nearest integer then compare that number to the Plus/Minus Grade Cutoffs below. Plus/Minus Grade Cutoffs A+ 97 B+ 87 C+ 77 D > F 97 > A > B > C > D > A > B > C > D- 60 Assessment Policies Homework Assignment Policy: All assignments are to be turned in at the beginning of the class in which they are due. Late assignments receive no credit. Assignments can be turned in early at your instructor s office. The assignment portion of your grade will be the average of all your assignment scores with the lowest assignment grade dropped. Paper Assignment Policy: Students are required to turn in a small paper analyzing an article published in the general press dealing about topics covered in class. Detailed instructions will be given later. Exam Policy: In the event that a student misses one of the first three exams, the points from the missed exam will be placed on the final. There are no make- up exams. The final will then be scored out of 500 rather than Page 2 of 6

3 300. In the event that a student misses a second in- term exam, the instructor reserves the right to give the student a zero on that exam. The following materials are allowed for use during the exam: accounting calculator or four- function calculator. There are to be no books, papers other than the exam itself, cell- phones or other items that connect to the internet. Students found to be using unapproved items are in violation of the Academic Integrity policy of the University and will be subject to disciplinary action. Important Dates: Deadline to Add: September 8 Exam 1: September 29, 7:00pm- 9:00pm, 113 David Kinley Hall Deadline to Drop without a grade of W: October 17 Exam 2: November 10, 7:00pm- 9:00pm, 113 David Kinley Hall Paper Assignment: December 10, in class. Final Exam: TBA Page 3 of 6

4 Final Exam Conflict Policy: From the University s final exam policy: Any student having more than two consecutive final examinations is entitled to rescheduling as follows if he or she takes the following action no later than the last day of classes: o The student must investigate whether a conflict examination is being held at another time for any of the examinations involved. o If a conflict examination has been scheduled for any of the courses, the student must take one or more of these conflict examinations. If conflict examinations are offered for more than one course, the student must take the conflict for the course that has the largest number of students. o If no conflict examinations have been scheduled, the student must contact the instructor of the course having the largest number of students. The contact must be made no later than the last day of classes, and that instructor must provide a makeup examination. o Normally in a semester several combined- sections, conflict, and noncombined examinations are given at the same time. As a guide to resolving conflicts, an order of priority has been established within each examination period, and a student should resolve a conflict using the published examination schedules and the following priority guidelines.! National and state professional examinations (e.g., CPA, actuarial science, Architecture Registration Examination) take priority over campus final examinations. An instructor must offer a conflict examination to a student scheduled to take a national or state professional examination and a campus final examination at the same time.! A noncombined course examination has precedence over any combined- sections or conflict examination.! A department offering a combined- sections final examination must provide a conflict examination if required to accommodate student conflicts. The University s final exam policy is available at: Emergency Response Recommendations: The university maintains guidelines for emergency responses. A list of recommendations when to evacuate and when to find shelter are available at: Floor plans for specific buildings are available at: Statement on Accommodations: To obtain disability- related academic adjustments and/or auxiliary aids, students with disabilities must contact the course instructor and the Disability Resources Educational Services (DRES) as soon as possible. To contact DRES you may visit 1207 S. Oak Street, Champaign, call (V/TTY), or a message to disability@uiuc.edu. Page 4 of 6

5 Academic Integrity: The University has the responsibility for maintaining academic integrity so as to protect the quality of education and research on our campus and to protect those who depend upon our integrity. Expectations of Students. It is the responsibility of each student to refrain from infractions of academic integrity, from conduct that may lead to suspicion of such infractions, and from conduct that aids others in such infractions. Students have been given notice of this Part by virtue of its publication. Regardless of whether a student has actually read this Part, a student is charged with knowledge of it. Ignorance is not a defense. The University s full academic integrity policy is available at: Page 5 of 6

6 Semester Schedule: Aug. 25: Introduction; Basics: Supply and Demand. Aug. 27: Market Equilibrium, Welfare and Taxes. Sep. 1: No Class (Labor Day). Sep. 3: World Trade: An Overview. Sep. 8: International Trade in Partial Equilibrium. (HW Assignment 1 due). Sep. 10: Instruments of Trade Policy. Sep. 15: International Trade in General Equilibrium. Sep. 17: The Ricardian Model (I). (HW Assignment 2 due). Sep. 22: The Ricardian Model (II). Sep. 24: The Ricardian Model (III). Sep. 29: Review Session (Optional). Midterm 1. (HW Assignment 3 due). Oct. 1: Specific Factors and Income Distribution (I). Oct. 6: Specific Factors and Income Distribution (II). Oct. 8: The Heckscher- Ohlin Model (I). Oct. 13: The Heckscher- Ohlin Model (II). Oct. 15: The Political Economy of Trade Policy. Oct. 20: National Income Accounts. Oct. 22: The Balance of Payments. (HW Assignment 4 due). Oct. 27: Exchange Rates: An Introduction. Oct. 29: The Asset Approach to Exchange Rates. (HW Assignment 5 due). Nov. 3: Money Markets and Interest Rates. Nov. 5: The Asset Approach in the Long Run Nov. 10: Review Session (Optional) Midterm 2. (HW Assignment 6 due) Nov. 12: The Purchasing Power Parity Theory. Nov. 17: The Real Exchange Rate. Nov. 19: Open Economy Macroeconomic Equilibrium (I). Nov. 24: No Class (Fall Break) Nov. 26: No Class (Fall Break) Dec. 1: Open Economy Macroeconomic Equilibrium (II). (HW Assignment 7 due). Dec 3: Open Economy Macroeconomic Policy. Dec. 8: Fixed Exchange Rate Regimes. Dec. 10: Alternative Exchange Rate Regimes. (HW Assignment 8 due; Paper due) Page 6 of 6

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