INTLCLASSB

INTLCLASSB - International Economics & Macro Why do...

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1 1 b Why do economists generally favor free trade? Why restrict trade? How? b How do exchange rates matter to the macro economy? b How are exchange rates determined in the short-run? The long-run? b What’s ‘bad’ about a current account deficit? A Financial account surplus? b What’s wrong with globalization? Globalization is good / antiwto 2 Course Issues b Consumption Function Assignment b Final Exam Conflicts – what is it? s see me after class or office hours with documentation starting 12/1 s Makeups only if documented conflict in advance b Graduating Seniors? b b Grade book problems-check NOW! b Grading explanation b Extra Credit b Last Class Tues 12/13 b Final Exam Thursday December 22 8am CAC Gym A 850 B+ 800 B 780 C+ 740 C 670 D 600 F < Total Points Approximate Curve 3 Is Globalization Bad for the U.S.? (and is the world flat?) s Free trade b Comparative Advantage – Gains from Trade b Economies of Scale b International transmission of ideas b International Competition s Flat World – Globalization b gains b larger labor pool b how to compete? W/MP
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2 4 International (Open-Economy) Macro s Exports, Imports and Aggregate Demand D=C+I+G+X-M s Open Economy Macro b Monetary Policy – strengthened s Ms ↑→ i ↓ → I ↑→ D s And Ms ↑→ i ↓ → $ ↓ → X ↓ → D more b Fiscal Policy – weakened s G ↑→ i ↑→ $ ↑→ D b Additional objectives s exchange rates and balance of payments Twin deficits Problem s Government Budget Deficit MAY lead to Current Account (‘trade’) deficit S Since Y=C+I+G+X-M = C+S+T then S M-X=(G-T)+(I-S) that is a trade deficit (M-X) can be caused by a government budget deficit (G-T) (holding I-S) constant S Greece? 5 World Trade Organization (WTO) s supervise and liberalize international trade s 1995 - replaced the General Agreement on Tariffs and Trade (GATT) started in 1948 s regulation of trade between participating countries s framework for negotiating and formalizing trade agreements s dispute resolution process aimed at enforcing participants' adherence to WTO agreements s Doha round (wikipedia) 6
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3 European Union (wikipedia) s economic and political union of 27 countries b 500 million pop, $16 trillion gdp s origins from the European Coal and Steel Community and European Economic Community 1958 - Germany s Maastricht Treaty 1993 – current name and form s supranational independent institutions and decisions negotiated by the member states b European Commission, Council of European Union, the Court of Justice of the European Union, and the European Central Bank. s
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This note was uploaded on 02/05/2012 for the course 220 103 taught by Professor Sheflin during the Fall '09 term at Rutgers.

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INTLCLASSB - International Economics &amp; Macro Why do...

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