Money and Banking
International Economics, Foreign Exchange Markets, International Finance, and Open Economy
Monetary Policy – Lots here – start early, will have to read additional material cited.
Essential Questions, Review Guide, Q&A schedule – later this week
Final Exam Conflicts, special accommodations
– see me after class NOW if you have not already.
Fed Point piece on floating exchange rates at
Fed Point piece on fixed exchange rates at
Fed Point on Balance of Payments at
And take a quick look at Table 1 in
Mankiw on the Trilemma
You may also want to look at sections of the New York Fed’s International Publication:
foreign exchange and role of central banks.
Look at more on international exchange issues
For even more, FX Market outline with more details:
((If you need a somewhat longer treatment of these topics, try:
and then use the table of
contents (detailed view) on the left to go
- Financial markets and the Economy , section 1, just the portion
on Exchange Rates .
chapter 15: Net Exports and International Finance
(if the links don’t work, copy and paste
them into the address bar of your browser or google flatworldknowledge and look for the Macro Principles text).
read 3 times, carefully -
once before the book, once after and during hw
Free Trade is potentially beneficial to all trading partners, although
not necessarily equally
Due to comparative advantage, that is when countries specialize in whatever production they have a
relative advantage in (lowest opportunity cost )
Also, trade leads to increased competition and transmission of ideas and technology
Thus barriers to trade are ‘bad’
Quota’s, tariffs, restrictions on dumping all reduce gains from trade. Attempts to ‘save jobs’ are very
expensive per job and inefficient
However, trying to assist those who lose jobs with retraining, tax breaks etc may be morally and
Impact of Open Economy on Macroeconomic issues
X increases aggregate
D, M reduces it (D=C+I+G+X-M)
determinants of X - $, foreign income
note using $ to mean dollar exchange rate with other
example # yen per dollar