University of Minnesota
ECON 8403, International Trade and Payments Theory
Spring 2012, Mini 1, F, 11.00AM-2.50PM, HHH 184


GRADING: 60% problem sets, 40% In class presentation


Class 1
Topic: Basic concepts such us net exports, current account, net foreign asset position. A simple Small open economy model, soe.m
Introducing uncertainty, international prices (terms of trade, real exchange rate) and general equilibrium
Set-up of the basic 2 goods international business cycles model

References: Backus Kehoe and Kydland AER, Heathcote and Perri 2000

Problem set 1. Due February 3 in class

Class 2
Topics: The basic 2 goods international business cycles model. Computation, calibration, data analysis (filtering) and model evaluation
Domestic business cycle statistics and international correlations
International prices (The Backus Smith puzzle)
The S-curve

References: Backus Kehoe and Kydland AER, Backus Smith 1993, Heathcote and Perri 2000

Class 3
Topic: International risk sharing

References: Lecture notes

Additional material: Cole and Obstfeld, 1991, Baxter and Crucini 1995, Martin 2009, Brandt Cochrane and Santa-Clara, 2006

Class 4:
Topic: International portfolio diversification

References:Baxter and Jermann 1997, Van Wincoop and Warnock 2006,Heathcote and Perri, 2009. Notes on solving portfolio problems

Class 5:
Topic: Limited enforcement of contracts: complete markets and incomplete markets

References: Bulow and Rogoff, 1989, Perri 2007 , Arellano 2007

Class 6
International Capital Flows

References: Fogli and Perri, 2009, Mendoza, Quadrini and Rios Rull, 2009, Gourinchas and Jeanne, 2009, Sandri, 2009, Martin and Taddei, 2010

Problem set 2. Due March 23 via email

Reading list for in class presentation