Advanced Macroeconomics part 2 2400-ZM1MAZ2
The aim of the course is to familiarize students with modern theories of international trade that emphasize the importance of economies of scale, product differentiation, oligopolistic market structures, and firm-level productivity differences for international trade, specialization, gains from trade, and welfare effects.
In addition, the course will discuss contemporary theoretical concepts explaining foreign direct investment flows, global value chains, and the role of multinational corporations. Trade policy instruments will also be analyzed within the framework of strategic trade policy.
Another part of the course focuses on advanced theories explaining the formation of the current account balance and the empirical verification of the intertemporal model. Models describing the determinants of exchange rates in the short and long run will also be covered.
The final part of the course examines the functioning of the labor market and attempts to explain the phenomenon of equilibrium unemployment from the perspective of efficiency wage theory (including the Shapiro-Stiglitz model) and search and matching theory in both static and dynamic frameworks.
As part of the seminar component, students prepare an empirical project, which is then presented during class sessions.
Topics covered in the course:
1. Gravity Model of Trade
Van Marrewijk, C. (2017). International Trade, Chapter 16. Oxford University Press.
2. International Trade under Imperfect Competition
Brander, J. (1981). Intra-industry trade in identical commodities. Journal of International Economics, 11(1), 1–14.
Brander, J., Krugman, P. (1983). A ‘reciprocal dumping’ model of international trade. Journal of International Economics, 15(3–4), 313–321.
Bernhofen, D. M. (1999). Intra-industry trade and strategic interaction: Theory and evidence. Journal of International Economics, 47(1), 225–244.
Dixit, A. K., Stiglitz, J. E. (1977). Monopolistic competition and optimum product diversity. The American Economic Review, 67(3), 297–308.
Krugman, P. R. (1979). Increasing returns, monopolistic competition, and international trade. Journal of International Economics, 9(4), 469–479.
3. Productivity Differences and International Trade – The Melitz Model
Melitz, M. J. (2003). The impact of trade on intra‐industry reallocations and aggregate industry productivity. Econometrica, 71(6), 1695–1725.
Helpman, E., Melitz, M. J., Yeaple, S. R. (2004). Export versus FDI with heterogeneous firms. American Economic Review, 94(1), 300–316.
4. Foreign Direct Investment, Multinational Corporations, and Global Value Chains
Helpman, E., Melitz, M. J., Yeaple, S. R. (2004). Export versus FDI with heterogeneous firms. American Economic Review, 94(1), 300–316.
Antràs, P., Yeaple, S. R. (2014). Multinational firms and the structure of international trade. Handbook of International Economics, 4, 55–130.
5. Strategic Trade Policy
Brander, J. A., Spencer, B. J. (1985). Export subsidies and international market share rivalry. Journal of International Economics, 18(1–2), 83–100.
Krugman, P. R. (1987). Is free trade passé? Journal of Economic Perspectives, 1(2), 131–144.
6. Intertemporal Model of the Balance of Payments
Obstfeld, M., Rogoff, K. (1996). Foundations of International Macroeconomics, Chapter 1: Intertemporal Trade and the Current Account Balance. MIT Press.
Feldstein, M., Horioka, C. (1980). Domestic Saving and International Capital Flows. Economic Journal, 90, 314–329.
7. Exchange Rate Determinants in the Short and Long Run
Goldberg, L., Campa, J. (2006). Distribution margins, imported inputs, and the sensitivity of the CPI to exchange rates. NBER Working Paper.
Van Marrewijk, C. (2012). International Economics, Chapters 17–22. Oxford University Press.
8. Equilibrium Unemployment – Efficiency Wage Theory (Shapiro–Stiglitz Model)
Romer, D. (2011). Advanced Macroeconomics, Chapter 10: Unemployment.
Shapiro, C., Stiglitz, J. E. (1984). Equilibrium Unemployment as a Worker Discipline Device. American Economic Review, 74, 433–444.
Yellen, J. L. (1984). Efficiency Wage Models of Unemployment. American Economic Review, 74, 200–205.
9. Search and Matching Models – Static and Dynamic Equilibrium
Bagliano, F., Bertola, G. (2004). Models for Dynamic Macroeconomics. Oxford University Press, pp. 188–211.
Romer, D. (2011). Advanced Macroeconomics, Chapter 10: Unemployment.
Szacunkowy nakład pracy studenta: 5ECTS x 25h = 125h
(K) - godziny kontaktowe (S) - godziny pracy samodzielnej
wykład (zajęcia): 24h (K) 0h (S)
ćwiczenia (zajęcia): 0h (K) 0h (S)
egzamin: 2h (K) 0h (S)
konsultacje: 10h (K) 0h (S)
przygotowanie do ćwiczeń: 0h (K) 0h (S)
przygotowanie do wykładów: 0h (K) 24h (S)
przygotowanie pracy empirycznej: 0h (K) 35h (S)
przygotowanie do egzaminu: 0h (K) 20h (S)
przygotowanie prezentacji: 0h (K) 10h (S)
Razem: 36h (K) + 89h (S) = 125h
Type of course
Course coordinators
Learning outcomes
KNOWLEDGE
Upon completion of the course, the student:
- understands advanced models of international trade under imperfect competition;
- is familiar with models explaining foreign direct investment flows and the formation of multinational firms;
- knows the factors determining the current account balance;
- understands the factors influencing exchange rate movements in the short and long run;
- is familiar with the concept of equilibrium unemployment and can describe its short-run fluctuations;
- understands advanced theories explaining the emergence of unemployment, including the equilibrium unemployment theory, efficiency wage theory, and search and matching theory;
- is aware of the imperfections and inefficiencies in the functioning of the labor market arising from the nature of wage-setting processes and search and matching mechanisms;
- possesses knowledge of institutional solutions designed to address or mitigate inefficiencies in the labor market.
SKILLS
Upon completion of the course, the student:
- interprets macroeconomic phenomena using advanced theoretical models based on microeconomic foundations and can prepare a presentation using independently collected empirical data;
- is able to understand the causes of economic growth in developed and developing countries;
- can identify the sources of market advantages in international trade under imperfect competition;
- can determine the causes and consequences of protectionist policies;
- can analyze the determinants of exchange rates in the short and long run, as well as interpret fundamental macroeconomic relationships in financial markets;
- can analyze the impact of various factors on the evolution of unemployment in the short and long run;
- can identify the causes of wage rigidity and unemployment from the perspective of efficiency wage and search theories;
- can assess how institutional factors affect the functioning and performance of the labor market;
- can identify policy tools and appropriate strategies to improve labor market efficiency and reduce sources of inefficiency.
SOCIAL COMPETENCES
Upon completion of the course, the student:
- is aware of the limitations of applying theoretical macroeconomic models to the interpretation of real-world economic phenomena;
- can critically evaluate data and information sources and is able to use and interpret them appropriately;
- is able to meet deadlines and independently organize their own work schedule;
- can actively participate in discussions and, based on solid theoretical foundations, engage in critical debate with incorrect or unfounded statements.
Learning outcomes codes: KW01, KW02, KW03, KW04, KU01, KU02, KU03, KU04, KU05, KU06, KU07, KK01, KK02, KK03
Assessment criteria
Presentation of empirical project (40%) and written exam (60%)
Bibliography
Antràs, P., Yeaple, S. R. (2014). Multinational firms and the structure of international trade. Handbook of International Economics, 4, 55-130.
Bagliano F., Bertola G. (2004) Models for Dynamic Macroeconomics, Oxford University Press, pp. 188–211.
Brander, J. (1981). Intra-industry trade in identical commodities. Journal of International Economics, 11(1), 1-14.
Brander, J., Krugman, P. (1983). A ‘reciprocal dumping’ model of international trade. Journal of International Economics, 15(3-4), 313-321.
Brander, J. A., Spencer, B. J. (1985). Export subsidies and international market share rivalry. Journal of International Economics, 18(1-2), 83-100.
Bernhofen, D. M. (1999). Intra-industry trade and strategic interaction: Theory and evidence. Journal of International Economics, 47(1), 225-244.
Cahuc P., Zylberberg A. (2004) Labor Economics, MIT Press.
Dixit, A. K., Stiglitz, J. E. (1977). Monopolistic competition and optimum product diversity. The American Economic Review, 67(3), 297-308.
Feldstein M., Horioka C. (1980). Domestic Saving and International Capital Flows, Economic Journal, Vol. 90, 314-329.
Goldberg, L., Campa, J. (2006). Distribution margins, imported inputs, and the sensitivity of the CPI to exchange rates. NBER Working Paper.
Helpman, E., Melitz, M. J., Yeaple, S. R. (2004). Export versus FDI with heterogeneous firms. American Economic Review, 94(1), 300-316.
Krugman, P. R. (1979). Increasing returns, monopolistic competition, and international trade. Journal of International Economics, 9(4), 469-479
Krugman, P. R. (1987). Is free trade passé?. Journal of Economic Perspectives, 1(2), 131-144.
Van Marrewijk C. (2012). International Economics, Chapters 17-22. Oxford University Press.
Van Marrewijk C. (2017). International Trade, Chapter 16. Oxford University Press.
Melitz, M. J. (2003). The impact of trade on intra‐industry reallocations and aggregate industry productivity. Econometrica, 71(6), 1695-1725.
Obstfeld, M., Rogoff, K. (1996). Foundations of international macroeconomics. Chapter 1: Intertemporal Trade and the Current Account Balance. MIT press.
Romer D. (2011) Advanced macroeconomics. Chapter 10: Unemployment.
Shapiro, Stiglitz (1984) 'Equilibrium Unemployment as a Worker Discipline Device', American Economic Review, Vol. 74, pp. 433-444.
Yellen J. L. (1984) 'Efficiency Wage Models of Unemployment', American Economic Review , Vol. 74, pp. 200-205.
Additional information
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