National Taiwan University
College of Management
724 D6020
International Economics
陳思寬 Spring 2001
Room 915 2363-0231 ext.2986

I. International Finance

Reference Books:

Dornbusch, R., Open Economy Macroeconomics, New York, Basic Books, 1980.

Gandolfo, G., International Economics II, 2nd, revised edition, New York: Springer-Verlag, 1995.

Gartner, M., Macroeconomics under Flexible Exchange Rates, London: Harvester Wheatsheaf, 1993.

Grossman, G. M. and K. Rogoff (Eds.), Handbook of International Economics Vol. III, Amsterdam: North-Holland, 1995. (HBGR)

Jones, R.W. and P.B. Kenen (Eds.), Handbook of International Economics Vol. II.,Amsterdam, North-Holland, 1985. (HBJK)

Krugman, P. and M. Obstfeld, International Economics: Theory and Policy, New York: HarperCollins College Publishers, 1997.

van der Ploeg, Frederick (Ed), Handbook of International Macroeconomics, Oxford:Blackwell Publishers, 1994.

Obstfeld, M. and K. Rogoff, Foundations of International Macroeconomics, Cambridge, Mass.: M. I. T. Press, 1996. (FIM)

1. Preliminaries: Balance of Payment Accounts
Dornbusch, Chapter 2.
Krugman-Obstfeld, Chapter 12.
Cooper, R.N., “The Balance of Payments in Review,” Journal of Political Economy, 1966.
Kindleberger, C., “Measuring Equilibrium in the Balance of Payments,” Journal of Political Economy, 1969.

2. Historical Overview: Elasticity Approach, Absorption Approach, Mundell-Fleming Model, Monetary Approach and Asset Approach
Dornbusch, Chapters 3, 4, 5, 6, 7, 10, 11.
Kenen, P., “Macroeconomic Theory and Policy: How the Closed Economy was Opened,”
(HBJK), Chapter 13.
Frenkel, J. and M. Mussa, “Asset Markets, Exchange Rates, and the Balance of
Payments,” (HBJK), Chapter 14.
Branson, W. and D. Henderson, “The Specification and Influence of Asset Market,” (HBJK),Chapter 15.
Bruce, N. and D. Purvis, “The Specification of Goods and Factor Markets in Open Economy Macroeconomic Models,” (HBJK), Chapter 16.
Marston, R., “Stabilization Policies in Open Economies,” (HBJK), Chapter 17.
Frenkel, J. and A. Razin, “The Mundell-Fleming Model a Quarter Century Later,” IMF Staff Papers, 1987.
Dornbusch, R., Chapters 11-12.
Obstfeld, M. and A. Stockman, “Exchange Rate Dynamics,” (HBJK), Chapter 18.
Dornbusch, R., “Expectations and Exchange Rate Dynamics,” Journal of Political Economy, 1976.
Frenkel, J. A., and C. A. Rodriguez, “Exchange Rate Dynamics and the Overshooting Hypothesis,” IMF Staff Papers, 1982.
Greenwood, J., “Expectations, the Exchange Rate, and Current Account, ” Journal of Monetary Economics, 1983.
Stockman, A., “The Equilibrium Approach to Exchange Rates,” Richmond Fed., Economic Review, 1987.
Stockman, A., “A Theory of Exchange Rate Determination,” Journal of Political Economy, 1980.
Taylor, M., “The Economics of Exchange Rates,” Journal of Economic Literature, 1995.

3. Exchange Rates and the Current Account
FIM, chapters 1 --3.
Obstfeld, M. and K. Rogoff, `The Intertemporal Approach to the Current Account,` (HBGR), chapter 34.
Feldstein, M. and C. Horioka, “Domestic Savings and International Capital Flows,” Economic Journal, 1980.
Frankel, J., “Measuring International Capital Mobility: A Review,” American Economic Review, 1992.
Tesar, L., `Savings, Investment and International Capital Flows,` Journal of
International Economics 31, 1991.

4. Exchange Rate Dynamics
4.1 Flexible Price Models of Exchange Rates
FIM, chapter 8, sections 8.1--8.3.
Lucas, R. E., “Interest Rates and Currency Prices in a Two-country World,” Journal of Monetary Economics, 1982.
Svensson, L.E.O.,`Currency Prices, Terms of Trade and Interest Rates: A General
Equilibrium Asset-Pricing, Cash-in-Advance Approach,` Journal of International
Economics, 1985.
4.2 Sticky Price Models of Exchange Rates
FIM, chapter 9.
Obstfeld, M. and K. Rogoff, `Exchange Rate Dynamics Redux,` Journal of Political
Economy 103, pp. 624--660, 1995.
Obstfeld, M. and K. Rogoff, `Risk and Exchange Rates,` NBER WP 6694, 1998.
Empirical Evidence on Exchange Rates
Frankel, J. and A. Rose, `Empirical Research on Nominal Exchange Rates,` (HBGR),
chapter 33.
Mark, N., `Exchange Rates and Fundamentals: Evidence on Long-Horizon
Predictability,` American Economic Review, 1995.
Meese, R. and K. Rogoff, `Empirical Exchange Rate Models of the Seventies: Are Any
Fit to Survive?` Journal of International Economics 14, 1983.
Meese, R.A. and A.K. Rose, “Nonlinear, Nonparametric, Nonessential Exchange Rate Estimation,” American Economic Review, 1990.

5. Spot and Future Exchange Markets and Market Efficiency
Levich, R., “Empirical Studies of Exchange Rates: Price Behavior, Rate Determination and Market Efficiency,” (HBJK), Chapter 19.
FIM, chapter 4 and chapter 10, pp.711--712.
Lewis, K., “Puzzles in International Financial Markets,” (HBGR), chapter 37, section 1.
Fama, E., “Forward and Spot Exchange Rates,” Journal of Monetary Economics, 1984.
Frankel, J., “In Search of the Exchange Risk Premium: A Six-Currency Test Assuming Mean Variance Optimization,” Journal of International Money and Finance, 1982.
Froot, K. and R. Thaler, `On the Efficiency of Foreign Exchange Markets,` Journal of
Economic Perspectives 4, 1990.
Hodrick, R. and S. Srivastava, “An Investigation of Risk and Return in Forward Foreign Exchange,” Journal of International Money and Finance, 1984.
Mark, N., “On Time-Varying Risk Premia in the Foreign Exchange Market: An Econometric Analysis,” Journal of Monetary Economics, 1985.
Rogoff, K., `The Purchasing Power Parity Puzzle,` Journal of Economic Literature, 1996.

6. Target Zones
Garber, P. and L. Svensson, `The Operation and Collapse of Fixed Exchange Rate
Regimes,` (HBGR), chapter 36.
Bertola, G. and R. Caballero, `Target Zones and Realignments,` American Economic
Review 82, pp. 520--536, 1992.
Flood, R.P. and P.M. Garber, “The Linkage between Speculative Attack and Target Zone Models of Exchange Rates,” Quarterly Journal of Economics, 1991.
Klein, M. W., `Playing with the Band: Dynamic Effects of Target Zones in an Open
Economy,` International Economic Review 31, pp. 757--772, 1990.
Krugman, P.R., “Target Zones and Exchange Rate Dynamics,” Quartly Journal of Economics, 1991.
Krugman, P.R. and M.H. Miller eds, Exchange Rate Targets and Currency Bands, Cambridge: Cambridge University Press, 1992.
Svensson, L.E.O., “The Term Structure of Interest Rates in a Target Zone: Theory and Swedish Data,” Journal of Monetary Economics, 1991.
Svensson, L.E.O., “An Interpretation of Recent Research on Exchange Rate Target Zones,” Journal of Economic Perspectives, 1992.
Tristani, O., `Variable Probability of Realignment in a Target Zone,` Scand. Journal of
Economic 96, pp. 1--14, 1994.

7. Balance of Payments Crises
FIM, pp. 379--389.
Garber, P. and L. Svensson, `The Operation and Collapse of Fixed Exchange Rate
Regimes,` (HBGR), chapter 36.
Cole, H. and T. Kehoe, `A Self-fulfilling Model of Mexico`s 1994-1995 Debt Crisis.``
Journal of International Economics 41, pp. 309-330, 1996.
Flood, R. and P. Garber, `Collapsing Exchange Rate Regime: Some Linear Examples.``
Journal of International Economics 17, pp. 1-13, 1984.
Flood, R.P. and N.P. Marion, “Speculative Attacks: Fundamentals and Self-Fulfilling
Prophecies,” NBER Working Paper 5789, 1996.
Flood, R.P. and N.P. Marion, “Perspectives on the Recent Currency Crisis Literature,`
NBER Working Paper 6380, 1997.
Krugman, P, `A Model of Balance of Payments Crises,` Journal of Money, Credit, and
Banking 11, pp. 311-315, 1979.
Krugman, P, “Are Currency Crises Self-Fulfilling?” NBER Macroeconomics Annual,
Cambridge: MIT Press, 1997
Obstfeld, M., `The Logic of Currency Crises.`` Cahiers Economiques et Monetaires 43,
pp. 189-213, 1994.

8. The Empirical Evidence on Real Exchange Rates
Baxter, M., “Real Exchange Rates and Real Interest Differentials,” Journal of Monetary Economics, 1994.
Bleaney, M. and P. Mizen, “Empirical Tests on Mean Reversion In Real Exchange Rates: A Survey,” Bulletin of Economic Research, 1995.
Dornbusch, R., “Real Exchange Rates and Macroeconomics: A Selective Survey,” NBER Working Paper 2775, 1988.
Edison, H.J., and B. D. Pauls, “A Re-assessment of the Relationship between Real Exchange Rates and Real Interest Rates: 1974-1990,” Journal of Monetary Economics, 1993.
Froot, K.A. and K. Rogoff, “Perspectives on PPP and Long-Run Real Exchange Rates,” NBER Working Paper 4952, 1994.
MacDonald, R., “Long-Run Exchange Rate Modeling: A Survey of the Recent
Evidence,” IMF Staff Papers, 1995.


II. International Trade

Reference Books:

Bhagwati, J. and T.N. Srinivasan, Lectures on International Trade, Cambridge, Mass.: M.I. T. Press, 1983.

Dixit, A.K. and V. Norman, Theory of International Trade: A Dual, General Equilibrium
Approach, London: Cambridge University Press, 1980.

Grossman, G. M. and K. Rogoff (Eds.), Handbook of International Economics Vol. III, Amsterdam: North-Holland, 1995. (HBGR)

Helpman, E. and P.R. Krugman, Market Structure and Foreign Trade, Cambridge: M.I.T. Press, 1985.

Jones, R. W. and P. B. Kenen (Eds.), Handbook of International Economics Vol. I, Amsterdam: North-Holland, 1985.

Krugman, P.R. (Ed.), Strategic Trade Policy and the New International Economics, Cambridge: M.I.T. Press, 1986.

Krugman, P.R., Rethinking International Trade, Cambridge: M.I.T. Press, 1990.

Markusen, J.R., J.R. Melvin, W.H. Kaempfer and K.E. Maskus, International Trade: Theory and Evidence, New York: McGraw-Hill, 1995.

1. The Ricardian Model : Trade and Comparative Advantage
Bhagwati and Srinivasan, Ch. 1-4.
Jones and Kenen, Ch. 1 Section 1, 2.1 and 2.2.
Deardorff, A., “The General Validity of the Law of Comparative Advantage,” Journal of Political Economy, 1980.
Dornbusch, R., S. Fischer and P. Samuelson, “Comparative Advantage, Trade and Payments in a Ricardian Model with a Continuum of Goods,” American Economic Review, 1977.

2. The Heckscher-Ohlin Model : Factor Proportions and the Pattern of Trade
Bhagwati and Srinivasan, Ch. 5 and Ch. 6.
Jones and Kenen, Ch. 1, Section 2.3.
Davis, D. R., D. E. Weinstein, S. C. Bradford, and K. Shimpo, `Using International and
Japanese Regional Data to Determine When the Factor Abundance Theory of
Trade Works,` American Economic Review 87, pp.421--446, 1997.
Deardorff, A., “The General Validity of the Heckscher-Ohlin Theorem,“ American Economic Review, 1982.
Deardorff, A., “Weak Links in the Chain of Comparative Advantage,” Journal of International Economics, 1979.
Deardorff, A., `The Possibility of Factor Price Equalization, Revisited,` Journal of
International Economics 36, pp. 167--175, 1994.
Jones, R., “The Structure of Simple General Equilibrium Models,” Journal of Political Economy, 1965.
Leamer, E. and J. Levinsohn, `International Trade Theory: The Evidence,` in HBGR,
1995.
Mussa, M., “The Two-Sector Model in Terms of Its Dual: A Geometric Exposition,” Journal of International Economics, 1979.
Trefler, D., `The Case of the Missing Trade and Other Mysteries,` American Economic
Review 85, pp. 1029--1046, 1995.

3. Gains from Trade
Bhagwati and Srinivasan, Ch. 14, Appendix I.
Jones and Kenen, Ch. 2, Section 1-3.
Dixit, A.K. and V. Norman, “Gains from Trade Without Lump Sum Compensation,” Journal of International Economics, 1986.
Eaton, J. and A. Panagariya, “Gains from Trade under Variable Returns to Scale, Commodity Taxation, Tariffs and Factor Market Distortions,” Journal of International Economics, 1979.
Kemp, M. and H. Wan, Jr., “Gains from Trade with and without Lump-Sum Compensation,” Journal of International Economics, 1986.
Markusen, J., “Trade and the Gains from Trade with Imperfect Competition,” Journal of International Economics, 1981.

4. Policy Intervention in Open Economy
Bhagwati and Srinivasan, Ch. 9.
Jones and Kenen, Ch. 2, Section 5-8.
Eaton, J. and A. Grossman, “Optimal Trade and Industrial Policy under Oligopoly,” Quarterly Journal of Economics, 1986.
Horstmann, I.J. and J.R. Markusen, “Up the Average Cost Curve: Inefficient Entry and the New Protectionism.” Journal of International Economics, 1986.
Bhagwati, J., “On the Equivalence of Tariffs and Quotas” in Baldwin et al. (eds.) Trade, Growth and the Balance of Payments: Essays in Honor of Gottfried Harberler, Chicago, Rand McNally and Company, 1965.
Young, L., “Tariffs vs. Quotas under Uncertainty: An Extension,” American Economic Review, 1980.

5. Scale Economies, Imperfect Competition and Trade
Bhagwati and Srinivasan, Ch. 8.2, 8.3.
Jones and Kenen, Ch. 1, Section 4, Ch. 7.
Ethier, W., “Decreasing Costs in International Trade and Frank Graham‘s Argument for Protection,” Econometrica, 1982.
Helpman, E., “International Trade in the Presence of Product Differentiation, Economics of Scale and Monopolistic Competition: A Chamberlin-Heckscher-Ohlin Approach,” Journal of International Economics, 1981.
Hummels, D. and J. A. Levinsohn, `Monopolistic Competition and International Trade:
Reconsidering the Evidence,` Quarterly Journal of Economics 110, pp.799--836,
1995.
Krugman, P., “Intraindustry Specialization and the Gains from Trade,” Journal of Political Economy, 1981.
Krugman, P., “Increasing Returns, Monopolistic Competition and International Trade,” Journal of International Economics, 1979.
Krugman, P., “Scale Economies, Product Differentiation and the Pattern of Trade,” American Economic Review, 1980.
Krugman, P., `Increasing Returns and Economic Geography,` Journal of Political
Economy 99, pp. 483--499, 1991.
Krugman, P., “Increasing Returns, Imperfect Competition and the Positive Theory of International Trade,” (HBGR), Chapter 24.

6. Trade, Growth and Development
Bhagwati and Srinivasan, Ch. 25, 31.
Jones and Kenen, Ch. 4, 6 and 11.
Bhagwati, J. and Srinivasan, T.N., “Trade and Welfare in a Steady State,” in J. Chipman and C.P. Kindleberger (Eds.): Flexible Exchange Rates and the Balance of Payments, North-Holland, 1981.
Grossman, G. M. and E. Helpman, `Product Development and International Trade,`
Journal of Political Economy 97, pp. 1261--1283, 1989.
Levine, R. and D. Renelt, `A Sensitivity Analysis of Cross-Country Growth Regressions,`
American Economic Review 82, pp. 942--963, 1992.
Long, N. V. and K. Wong, `Endogenous Growth and International Trade: A Survey,` in
B.S. Jensen and K. Wong eds., Dynamics, Economic Growth and International
Trade, Ann Arbor, MI: University of Michigan Press, 1996.
Smith, M.A.M., “Evaluating Intertemporal Gains from Trade,” Journal of International Economics, 1979.