Electives: International Economics

The course focuses on understanding and evaluating the impact of the Financial Sector on the development of the real economy. This course consists of a two parts. In the first part (approx 25%) we will discuss theories of Financial Development. In the second part (approx 75%) we will see how researchers implement different econometric techniques to examine various theories to examine the impact of Finance on the Real Economy. To this end, we will revisit econometric theory to understand the underlying assumptions and limitations of econometric estimators. We will then examine and replicate empirical research papers to see how different techniques (OLS, Panel estimation, Instrumental-variables and Differences-in-Differences) are utilized to identify a causal relationship. This fosters the understanding of limitations of empirical research.

There is ample empirical evidence that some countries are richer than others and that some countries tend to grow faster than others. This course assesses the question why this is so by studying macroeconomic growth models. The course covers growth models in the spirit of Solow with an exogenous savings rate and intertemporal growth models with an endogenous savings rate, both real and monetary versions. Models of endogenous growth such as the Romer Model (1990) will also be discussed. Theoretical results will be contrasted with empirical findings. Particular emphasis is placed on the building blocks of the growth models so that students can learn to understand both the policy implications resulting from the respective growth models as well as their limitations for public policy makers. From a methodological perspective the course will introduce the students to dynamic optimization via Pontryagin’s Maximum principle.

The aim of this course is to familiarize students with the most relevant topics in the field of development economics, and in particular with its microeconomic aspects. An integral part of the course is to combine economic theory with empirical methodology.

This course introduces students to the study of the role of firms and industries in the process of economic development, focusing on the specific institutional environment of developing countries. The focus of this course is primarily methodological, and we will use recent empirical literature to study selected aspects of the microeconomics of industrial sector development, including the role of financial markets, labor markets, and international trade in explaining individual firm behavior, productivity, market structure, and industry dynamics.

The course gives an overview of areas, strategies and instruments of economic integration within the European Union. It will also deals with current debates such as the effect of Brexit or the future of the monetary union.

This course is thought to Master students in the field of finance. It offers a substantiated view about issues of Financial Systems and tools to analyze them. Against this background the course is divided in three parts. The first part covers the basic topics of international banking that is first the need for financial intermediation and thereby for financial intermediaries; second, topics concerning banking behavior as strategy and merger & acquisition; third, regulation setting the rules for international banking and last other financial institutions like capital markets and insurance companies which complete the institutions within a financial system.

The second (major) part deals with the setup and the analysis of financial systems in a general context. But it also covers in-depth the financial systems of Germany, France, United Kingdome and the United States. The main objective of this chapter is to demonstrate the importance of each part of a financial system which is the financial sector, the corporate (non-financial) sector, corporate governance and the way this fit together. The course also refers to macroeconomic impacts of banking and financial systems by discussing the field of financial systems’ design and economic growth.

The third part introduces the field of development finance and especially micro finance as a relatively new tool in banking. Thereby, this chapter covers the evolution of development finance within several decades and discusses strategies and success. It also touches ethics aspects of development/micro finance and provides a theoretical framework for a commercial approach in micro finance. At the end of this course students are able to access problems of Financial Systems and to detect future challenges. They are provided with a toolbox to analyze Financial Systems and to derive conclusions about stability and consistency for different countries. Last, students get to know with the challenges of development finance and in detail with micro finance as a special part of some Financial Systems.

This course offers an introduction to international trade theory and develops the main tools for trade policy analysis. In the first part of the course, we will analyze the causes and consequences of international trade. We will investigate why nations trade, what they trade and who gains and who loses from this trade. In the second part, we will analyze the motives, both economic and political, for countries or organizations to restrict or regulate international trade and study the effects of such policies on economic welfare. The course covers both, perfectly competitive and imperfectly competitive models of international trade, and supplements the theory with empirical evidence. The concepts introduced in the lecture are reviewed and deepened in problem sets partially corrected in class.

Building on methodologies and instruments acquired in compulsory courses in earlier semesters, the lecture series entitled ”International Financial Architecture” takes a practical view on the realities of today’s global financial markets. Starting with an overview of the most important capital and banking markets, the series continues to review major industry and product trends. A further key topic will be the degree of integration of global and regional financial markets in selected market segments and infrastructure. Particular attention will be devoted to financial crises and market failures and the possible remedies. Finally, regulation and supervision as potential mitigants for financial market failure will be reviewed.

The course will consist of three parts.

In the first part we introduce basic concepts and theories of modern international macroeconomics, like the determination of the current account, international prices, and the role of international financial markets. The main framework of the analysis is the inter-temporal approach to the current account. We will start by deriving the current account equation for a small open economy with one good, one internationally traded asset in the deterministic case. We will therefore add uncertainty, investment, durable goods, government expenditure, endogenous labor supply. For each of those cases we also discuss the testable implications of the theory. At last we move to the two good model and discuss the Harrod-Balassa Samuelson effect.

In the second part we will move to the international real business cycle literature. The goal of this research is to understand and explain business fluctuations and their international transmission. We will first introduce the basic model of international real business cycle (Backus, Kehoe and Kydland JPE 1985) which is a stochastic dynamic general equilibrium model with endogenous labor supply and two goods aggregated via an Armington aggregator. After discussing the implications of this model, we will overview the major puzzles in international macroeconomics: Feldstein-Orioka, the home bias in consumption and home bias in investment, Mussa puzzle, disconnect puzzle, Backus-Smith puzzle, output/investment/employment correlation puzzle.

Finally we will briefly introduce the most recent new open economy literature whose models depart from the international RBC literature because of the addition of nominal frictions.