Course content

This course studies macroeconomics in small open economies, i.e. situations where a country is too small to affect the world market, and so takes international prices and interest rates as given and independent of national policy. A key distinction is made between those sectors that compete internationally (traded sectors) and those that do not (non-traded sectors). Topics include the exchange rate determination in small open economies, the balance and development of the traded versus the non-traded sector, monetary policy, and how the petroleum sector influences economic activity and its composition.

Learning outcome

Knowledge

You learn

• How monetary and fiscal policy affect nominal and real exchange rates

• How the exchange rate is affected by temporary and permanent economic disturbances ("shocks")

• How the balance between the sheltered and exposed sectors depends on economic policy and the petroleum sector

• How interest rates should be set in a small open economy

• How fiscal policy works in a small open economy

Skills

You should be able to

• Explain key theories and models suitable for studying macroeconomic issues in small open economies

• Analyze a wide range of macroeconomic policies using relevant economic models

General competence

You should be able to

• Read and understand reports and research articles related to the topics discussed in the course
• Apply the course content in your own independent academic work, such as your master’s thesis

Learning methods and activities

2 hours of lectures every week. The course has compulsory activities. Specific requirements will be announced at the beginning of the term. The term papers can be written as a joint project. The course is an optional master's course and is not taught every semester. Check courses that are taught at https://www.ntnu.no/econ/valgfrie-masteremner. Students enrolled in ISØ's master programs can take the course any semester. Contact the department (kontakt@econ.ntnu.no) to get access to learning resources.

Compulsory assignments

• Mandatory activity

Recommended previous knowledge

Bachelor's degree in Economics

Required previous knowledge

None

Course materials

Announced at the beginning of the term.

Credit reductions