PEMAOE Macroeconomics of Open Economy

Faculty of Economics and Administration
Spring 2009
Extent and Intensity
2/0/0. 3 credit(s). Type of Completion: zk (examination).
Teacher(s)
Ing. Bc. Dana Dobešová (lecturer)
Guaranteed by
prof. Ing. Pavel Ondrčka, CSc.
Department of Economics – Faculty of Economics and Administration
Contact Person: Lydie Pravdová
Timetable
Thu 9:20–11:00 P403
Course Enrolment Limitations
The course is offered to students of any study field.
Course objectives
Macroeconomics of Open Economy (PEMAOE) This advanced course aims to broaden the macroeconomic knowledge and provide a survey of contemporary approaches to the theory of open economy. It provides theoretical tools for an analysis of determinants of the behaviour of open economy and explains economic theory to allow an understanding of the structure, functioning and influence on the open economy from development in other segments of world economy. It presents a general abstract model of an open economy, accentuating the phenomena of the international economic interdependence and globalisation. The course will cover: Open economy and determination of balanced production under the conditions of perfect capital mobility and perfect capital immobility. Equilibrium of an open economy under the conditions of imperfect capital mobility. A more detailed analysis of the Mundell-Fleming model. Efficiency of monetary and fiscal policy in the system of fixed and flexible exchange rate. The monetarist and Keynesian concepts of determination of the balance of payment. Aggregate demand in an open economy in the systems of fixed and flexible exchange rate, respectively. Exogenous economic shocks. The Fleming model and effects of fiscal and monetary policy in different forms of capital mobility in different systems of courses. The aggregate demand curve in an open economy and different concepts of aggregate supply curves - classical, Keynesian and Friedman s concepts. Examination: written.
Syllabus
  • Lectures: 1. Open economy characteristics, economy product equilibrium in open economy 2. Fundamental determinants of current account, price elasticity of imports and exports, current account and economy product equilibrium, exchange rate changes and their impacts on current account, economy product and equilibrium on product market 3. Balance of payments, factors, which influence current account and financial account, balance of payments equilibrium, BP curve, exchange rate and BP curve 4. Perfect capital mobility, perfect capital immobility, imperfect capital mobility, interest rate elasticity of financial flows and slope of BP curve 5. Mundell-Fleming model analysis, model presumption and limitation, model overspread for perfect capital mobility and perfect capital immobility in fixed / flexible exchange rate system 6. Mundell-Fleming model in connection with imperfect capital mobility in fixed / flexible exchange rate system 7. Monetarist a Keynesian concept of balance of payments determination – starting points and presumptions of fundamental monetarist model, equilibrium of balance of payments, balance of payments imbalance and mechanism working toward equilibrium, consequences of BP equalization 8. Devaluation impacts and foreign price level growth effects in monetarist concept, Keynesian concept of balance of payments, equilibrium mechanism and its outcomes, comparison of monetarist and Keynesian concept of BP 9. Aggregate demand in open economy, derivation of AD in open economy from IS-LM model, aggregate demand in open economy in fixed / flexible exchange rate system 10. Derivation of AD in open economy and its characteristics in situation of current account balance maintaining (in perfect capital mobility, perfect capital immobility, imperfect capital mobility) 11. Different concepts of aggregate supply concepts – classical, Keynesian, Friedman concept 12. Model AS-AD in open economy, exogenous economic influences on economy equilibrium, impacts of exogenous factors on BP curve (foreign trade, foreign price level, foreign interest rate, exchange rate changes etc.) 13. Fleming model and effects of fiscal and monetary policy in different forms of capital mobility in fixed / flexible exchange rate system on equilibrium in Fleming model, representative problems of open economy theory. Summary.
Literature
  • DORNBUSCH, Rudiger and Stanley FISCHER. Makroekonomie. 1. vyd. Praha: SPN, 1994, 602 s. ISBN 8004255566. info
  • DORNBUSCH, Rudiger. Open economy macroeconomics. New York: Basic Books, 1980. info
  • FRAIT, Jan and Roman ZEDNÍČEK. Makroekonomie. Ostrava: Vysoká škola báňská - Technická univerzita Ostrava, 1997, x, 179. ISBN 807078296X. info
  • MACH, Miloš. Makroekonomie pro inženýrské studium. 1. vyd. Praha: Vysoká škola ekonomická v Praze, 1994, 188 s. ISBN 8070792698. info
Assessment methods
The course is lectured and concluded with a written test. The minimum demanded for passing the test is 60% of total value. There is a great need for preparing and studying the subject at home during semester in the form of recommended literature and professional articles in expert periodicals in English, which are available for students in IS.
Language of instruction
Czech
Further Comments
Study Materials
The course is taught annually.
The course is also listed under the following terms Spring 2002, Spring 2003, Spring 2004, Spring 2005, Spring 2006, Spring 2007, Spring 2008.
  • Enrolment Statistics (recent)
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