The introductory session (Danny Cassimon) frames the topic within the concept of global public goods, and explains why supranational interventions, and international organisations, are needed in this area. This session also provides a conceptual introduction to a country’s Balance of Payments (BOP), as the basic framework where cross-border flows of goods, services and money are recorded.
The next sessions then discuss basic concepts, theories, policies and (international) institutions ultimately determining these flows recorded in the BOP. One part (Jean-François Maystadt) discusses the real (trade) issues, the other part (Danny Cassimon) discusses monetary (capital flows) issues.
1) International trade theory, policy and institutions (Jean-François Maystadt).
The sessions of this subdivision aim at introducing the students to some fundamental economic principles and empirical evidence regarding international trade and trade policy. The coverage of trade theories and policies is meant to provide arguments to understand the notion of free trade (and its generated controversy), as a keystone, in the construction of important institutions in the world economy such as the WTO and Regional Integration Agreements.
2) International Economics of the International Financial System (Danny Cassimon):
The remaining sessions deal with some basic concepts, as well as the theory and practice of the functioning of the international monetary system, and cross-border capital movements. First, it describes the key characteristics of a ‘good’ international monetary system and defines and measures cross-border transactions. It then discusses the traditional case in favor of free capital mobility in theory, and then confronts this with current practice and the empirical debate, leading to an extended theoretical framework that matches better with observed realities. Furthermore, we describe basic concepts related to the exchange rate, and describe basic interlinkages (‘parity relations’) between key international financial variables, such as exchange rates, and interest rates. We also discuss different exchange rate systems, and highlight the concept of ‘speculation’. Next, we provide an overview of different types of (international) financial crises, and apply this to a few of the recent international financial crises, including the recent Euro-crisis. The final sessions discuss the role of the ‘International Financial Institutions’ such as the IMF and World Bank.
A more detailed description of the contents of each session will be presented to students during the first session of the course, and is also available on at Blackboard.