International Macroeconomic Policy:
Theory and Evidence from
  Recent Financial Crises
B30.2380.01, B30.2380.10,  B30.2380.U1
Fall 2007

(*) denotes a required reading
(x) denotes a reading available in the reading and case packet

I. AN OVERVIEW OF THE WORLD ECONOMY

I. 1. Monitoring Macroeconomic Performance

• Roubini, Handout on Macroeconomic Issues and Vulnerabilities in the US and Global Economy (*)
  
• Roubini and Backus, Lectures in Macroeconomics, Chapter 1. (*)
• Krugman and Obstfeld, Chapter 12 (*)
• Link to the Roubini Global Economics (RGE) Monitor
• Ritholtz, The Ongoing Impact of the Housing Sector, Aug 2007 (*)
• Roubini, Are We at The Peak of a Minsky Credit Cycle?, Jul 2007 (*)
• Cecchetti, Federal Reserve Policy Actions in August 2007, Aug 2007 (*)
• BNP Paribas, Stress Charts: Normalisation Stalls in Money Markets, Aug 29, 2007 (*)
• Roubini, Current Market Turmoil: Non-Priceable Knightian “Uncertainty” Rather Than Priceable Market “Risk”, Aug 2007 (*)
• Morgan Stanley, After the Shock: Risks for the Global Economy and Markets, Aug 2007 (*)
  
• Societe Generale, The 2007 crisis in confidence and liquidity, AKA the sub-prime crisis, Aug 2007 (*)
• Roubini, Worse than LTCM: Not Just a Liquidity Crisis; Rather a Credit Crisis and Crunch, Aug 2007 (*)
• Morgan Stanley, Challenges for Corporate Profits, Aug 2007 (*)
• Dullien, How much will market turbulences dampen growth in EMU: A first assessment, Aug 2007 (*)
• Morgan Stanley Japan: Welcome Back ZIRP?, Aug 2007 (*)
• Citigroup Market Turmoil and the Macro Outlook, Aug 2007
  
• Morgan Stanley China: 'Non-Linear Impact and China-US Decoupling, Aug 2007 (*)
  
• Morgan Stanley The 2007 Financial Crisis: Inflationary or Deflationary? Aug 2007 (*)
  
• PIMCO Emerging Markets Watch: They don’t ring a bell at the top of the market, Aug 2007  (*)
• Morgan Stanley Emerging Markets: Emerging Questions, Aug 2007 (*)
• Danske Bank, From this (Minsky) Moment On, Aug 2007
• "Survey of the Global Economy" The Economist (to be issued in October 2007) (*)
• Bernanke, Speech on Housing and Monetary Policy at the Jackson Hole conference, Aug 2007
  
• Financial Crises: Lessons from History, BBC Aug 2007 (*)
  
• Other Background Readings and Materials (not required readings):
  
• Testimony of Chairman Ben Bernanke, Federal Reserve Board's semiannual monetary policy report to the Congress July 18th, 2007
• 2006 Economic Report of the President by the Council of Economic Advisers, Feb 2007
  
• IMF Decoupling the Train? Spillovers and Cycles in the Global Economy, Apr 2007
  
• IMF World Economic Outlook, April 2007
• IMF Financial Market Update, July 2007
• IMF World Economic Outlook, September 2007 Chapter 1 (to be published at the end of September 2007)
• Link to the RGE page on The U.S. Economy
• Link to the RGE page on Current Global Macroeconomic Issues
• Morgan Stanley Global Economic Forum
• Roubini and Menegatti, The Housing Recession is Still Far from Bottoming Out, Mar 2007
  

• Roubini and Setser "Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies", Chapter 2. (*)
• Roubini and Backus, Lectures in Macroeconomics, Chapter 1. (*)
  
• "Survey. The Global Economy: The New Titans" The Economist Sep 2006) (*)
• "The Balance Sheet Approach to Financial Crises", by Mark Allen, Brad Setser, Christian Keller. Nouriel Roubini and Christoph Rosenberg, IMF, Dec 2002
• Roubini "Global Imbalances: A Contemporary Rashomon Saga", Jan 2007; to be distributed via email (*)
• Roubini and Setser "The U.S. as a Net Debtor: The Sustainability of the US External Imbalances", Sep 2004. (*)
• "The world economy: Capital markets are hindering, not helping, global economic adjustment", The Economist, Aug 18, 2005 (*)
• "Survey: The World Economy" The Economist, Sep 22, 2005 (requires Economist subscription) (*)
  
• Roubini, The Instability of the Bretton Woods 2 Regime, Jul 2007
• Other Background Readings and Materials (not required readings):
• IMF Global Financial Stability Report, April 2007
• IMF Financial Market Update, July 2007
• World Bank: Global Economic Prospects and the Developing Countries 2007
  
• World Bank: Global Economic Prospects and the Developing Countries 2008 (to be published in the fall of 2007)
  
• Link to the RGE page on Is the U.S. Current Account Deficit Sustainable?
• Link to the RGE page on Emerging Markets
  

I. 3. International Indicators: Exchange Rates and Interest Parity Conditions

• Roubini and Backus, Lectures in Macroeconomics, Chapter 3. (*)
• Krugman and Obstfeld Chapter 13 (*)
• Roubini and Setser "The U.S. as a Net Debtor: The Sustainability of the US External Imbalances", Sep 2004 (*)
• Deutsche Bundesbank "Exchange rates and interest rate differentials: recent developments since the introduction of the euro", Jul 2005 (*)
  
• Chapter 13 of Student Resources in Krugman and Obstfeld's textbook web site
• "A Much Devalued Theory", The Economist, Jan 20, 1996. (*) (x)
• "In defence of deficits", The Economist, Dec 16, 1995. (*) (x)
• Feldstein "Global capital flows: too little, not too much", The Economist, Jun 24, 1995. (*) (x)

II. EXCHANGE RATES AND FINANCIAL CRISES

II. 1. Exchange Rates in the Short-Run and Long Run

• Roubini and Backus, Lectures in Macroeconomics, Chapters 7. (*)
• Krugman and Obstfeld, Chapter 14 (pages 373-387) and Chapter 15. (*)
• Chapter 15 of Student Resources in Krugman and Obstfeld's textbook web site
• The Big Mac Index home page from The Economist
  
• "Saturated solution", The Economist,  Jul 27, 2000 (*) (x)
• "New solutions, new questions", The Economist,  Aug 3, 2000 (*) (x)
  

II. 2. Money, Interest Rates and Exchange Rates

• Roubini and Backus, Lectures in Macroeconomics, Chapter 8. (*)
• Krugman and Obstfeld Chapter 14 (*)
• Roubini and Setser "Will the Bretton Woods 2 Regime Unravel Soon? The Risk of a Hard Landing in 2005-2006", Feb 2005. (*)
• Chapter 14 of Student Resources in Krugman and Obstfeld's textbook web site
• "Better than guesswork?", The Economist, Oct 28, 1999 (*) (x)
  

II. 3. Fixed Exchange Rates and the Dynamics of Currency Crises

• Roubini and Setser "Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies", Chapter 2. (*)
• Roubini and Backus, Lectures in Macroeconomics, Chapter 8 (*)
• Survey: Global Finance - Cruel sea of capital by Clive Crook, The Economist May 1, 2003 (*)
• Roubini "A Primer of Early Warning Systems", June 2004 (to be distributed by email) (*)
• Krugman and Obstfeld Chapter 17 (*)
• Chapter 17 of Student Resources in Krugman and Obstfeld's textbook web site
• The Mexican Peso Crisis", IMF, 1995; in case package. (*) (x)
• "Getting out of a fix", The Economist, Sep 20, 1997. (*) (x)
• "Are crashes catching ?", The Economist, Aug 31, 1996. (*) (x)
• Link to the RGE page on Asia's Economic and Currency Crisis.

• Roubini and Setser "Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies", Chapters 1, 6, 8. (*)
• Roubini "A Primer of Early Warning Systems", June 2004 (handout to be distributed by email) (*)
• Krugman and Obstfeld, Chapters 17 and 22 (*)
• Report on the Evaluation of the Role of the IMF in Argentina 1991-2001 Independent Evaluation Office, IMF, June 30, 2004.(basic material for the Assignment #4: Argentina's Financial Crisis and Default)
• "Currency Dilemmas", The Economist,  Nov 18, 2000 (*) (x)
• "Emerging markets: How the bug can spread", The Economist, Jul 19, 2001 (*)

III. THE KEYNESIAN THEORY OF THE SHORT-RUN

III. 1. The IS/LM model in the Closed Economy

• Roubini and Backus, Lectures in Macroeconomics, Chapter 9. (*)
• "How low can they go?", The Economist, Dec 2, 1995. (*) (x)
• "Bubble trouble", The Economist, Sep 2, 1999 (*) (x)
  

III. 2. The IS/LM model in the Open Economy

• Krugman and Obstfeld Chapter 16 (*)
• Roubini Notes on the Open Economy IS/LM Model (*)

(See Roubini Global Economics (RGE) Monitor Web Site (http://www.rgemonitor.com) for many  other materials and basic readings on these topics)

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