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2011/2012  BA-HAI_1IE  International Economics

English Title
International Economics

Course Information

Language English
Point 7,5 ECTS (225 SAT)
Type Mandatory
Level Bachelor
Duration One Quarter
Course Period Fourth Quarter . Summer
Time Table Please see course schedule at e-Campus
Study Board
Study Board for BSc in International Business
Course Coordinator
  • Battista Severgnini - Department of Economics
Main Category of the Course
  • Economics, macro economics and managerial economics
Last updated on 29 maj 2012
Learning Objectives
After having attended the course the students should be able to:
  • Explain basic terminology from International Economics in a comprehensive and intuitive way.
  • Describe and rationalize the main assumptions behind trade models.
  • Perform policy experiments.
  • Illustrate diagrammatically these models and perform analysis of the pattern of trade, gains of trade and effect on the income distribution from free trade.
  • Solve algebraically simple trade models in order to determine the equilibrium economic variables.
  • Describe and rationalize the main assumptions behind the main models of Open Economy Macroeconomics, such as models based on PPP, the uncovered interest parity etc.
  • Illustrate diagrammatically these models, perform policy experiments and interpret verbally what happens when moving from one equilibrium to another.
International Economics:
Assessment Written Exam
Marking Scale 7-step scale
Censorship No censorship
Exam Period May/June and August, the regular exam takes place in June. The make-up and re-examination takes place in August.
Aids Closed Book
Duration 4 Hours
No aids allowed other than basic language dictionaries (e.g. from mother tongue to English and vice versa and English/English).
The Make-up and Re-examination takes place according to the same rules as the regular exam.
Course Content

The aim of the course is to enable the students to understand and explain the determinants of international trade and monetary economics. Moreover, the students should understand the scope for economic policy in open economies and the role played by institutions.

This course offers a detailed introduction to international economics. The first part of the course deals with International Trade Theory providing the tools necessary for an analysis of the “real” economic variables (relative prices as well as the amount of goods produced, consumed and traded). We will develop an analytical framework for studying international trade to answer the question ‘Why do nations trade?’ We study the Ricardian model, the Hechscker-Ohlin, the Standard Trade model and imperfect competition models. Furthermore, we use the analytical framework to examine direct investment and policies that government adopts (e.g. introducing tariffs or quotas) toward international trade.

In the second part of the course the focus is on the “monetary” variables (the overall price levels measured in different currencies, the money supply, interest rates, inflation and foreign exchange rates). We develop a theoretical framework that allows us to understand the interaction between “monetary” and “real” variables. We study the balance of payment concepts, nominal and real exchange rates, how monetary policy affects nominal exchange rates and finally the link the nominal exchange rate and output determination in an open economy in the short and the long run. Furthermore, we analyze a brief history of the international monetary system and of the single European currency. Finally, we study the macroeconomic causes and consequences of the global financial crisis and recession of 2007-2009.

Teaching Methods
Lectures and Exercises
Student Workload
Lectures 42 hours
Exercises 12 hours
Preparation for class and exams 171 hours
Paul R. Krugman,Maurice Obstfeld and Marc Melitz, International Economics: Theory and Policy, Pearson International Edition, latest edition

Additional optional readings will be posted on the website of the course.