Course content

Globalisation affects the effectiveness of macroeconomic policy instruments. Small open economics with free mobility of capital are strongly affected by international conditions. The foreign exchange market has a large impact on domestic financial markets and the possibilities for macroeconomic policy. New institutional arrangements are developed as response to the new challenges, as for example independent central banks and a common currency (EU). The course includes different topics to illustrate monetary and fiscal policy in small open economies.

Learning outcome

Knowledge

You learn

• the difference between the trade balance and the current account, and how the two concepts are related
• which macroeconomic forces that determine current account surplus or deficit
• about pros and cons of free capital movements across country borders
• whether trade and current account imbalances can and should be corrected with macroeconomic policy
• if a country can be bankrupt
• how private and government saving affects the trade balance and the current account
• how monetary and fiscal policies affect nominal and real exchange rates
• how exchange rates are affected by temporary and persistent economic shocks
• why and how economic crises spread across countries

Skills

You should be able to

• explain and discuss central theories and models of the current account, the foreign exchange market, international capital movements, and macroeconomic crises
• analyze a broad set of international macroeconomic problems by using relevant economic models.

General competence

You should be able to

• read and understand reports and research articles dealing with issues discussed in the course
• use the content of the course in your own academic work like your master thesis

Learning methods and activities

4 hours of lectures every week. The course has compulsory activity. Specific requirements will be announced at the beginning of the term. The course is an optional master's course, and is not taught every autumn semester. Check www.ntnu.edu/econ. Students enrolled in ISØ's master programs can take the course any semester.

Compulsory assignments

• Obligatory course work

Specific conditions

Recommended previous knowledge

Compulsory courses in Master of Science in Economics

Required previous knowledge

None

Course materials

Announced at the beginning of the term.

Credit reductions