London School of Economics and Political Science (LSE)
Modules
16
International Economics
Prerequisites – 65 Macroeconomics and either
28
Managerial economics or 66 Microeconomics
The subject is conventionally divided in two parts: international trade
and international monetary economics. This virtually coincides with the
distinction between the microeconomics and the macroeconomics of the open
economy.
International trade: Reasons for trade and explanation of trade
patterns; the gains accruing from trade or from restricting trade. These
are core areas and call for extensive coverage. Adjacent to this core are
a number of specific issues which must also be studied: increasing returns
and trade; international factor movements; growth and trade; income
distribution and trade; economic integration; multinational enterprises;
‘North–South’ issues. Empirical evidence supplements the theoretical
treatment.
The EU, WTO and UNCTAD are institutionally involved in trade policy
issues and their major concerns are included in the subjects to be
studied.
International monetary economics: The balance of payments;
exchange rates. (Subheadings under the former include: balance of payments
accounts; alternative concepts of surplus or deficit; identities which
link a surplus/deficit with national income/expenditure aggregates and
with money stock; financing of deficit. Subheadings under exchange rates
include: spot and forward markets; pegged, floating and discretionary
intervention regimes; trade weighted and ‘real’ exchange rates; exchange
rate stability: the Marshall–Lerner condition; exchange rate stability:
the role of speculators; purchasing power parity hypothesis). Simple open
economy models and their principal features; policy targets and
instruments; issues of macroeconomic management; independence and
interdependence of open economies; effects of exogenous events such as
unilateral transfers. North Sea oil etc. Empirical evidence, though often
inadequate and conflicting, is relevant in many areas.
Issues associated with the EMS, the IMF and, in general, with
international monetary relations are also included in the syllabus.
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