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ECON 318: INTERNATIONAL TRADE AND FINANCE

Spring 12-week, 2012


INSTRUCTOR: Dr. Uur Aker (To remember the first name, think of SEWER and drop the S; to pronounce the second name, say I CARE with a southern accent!) MWF 2:45-4:05 Hinsdale 120 113 Hinsdale Every day in the afternoon and by appointment. If it is important, please make an appointment. Please feel free to stop by my office to clarify concepts, argue against my opinion, glorify or condemn economics, etc. 569-5142 office 569-3494 home (Please no calls after 10 PM) My e-mail is: akerus@hiram.edu. This syllabus and lecture notes will be posted in my web site: http://thehiramcollege.net/econ/ The textbook has its own web site: http://wps.aw.com/aw_krgmnobstf_interecon_8/ I. COURSE DESCRIPTION: Compared to fifty years ago, U.S. economy is five times more open: in 1960, exports and imports comprised about 10% of GDP. Today, the sum of exports and imports make up 30% of GDP. Still, compared to many other countries, U.S. would be considered relatively closed. The percentage of exports plus imports to GDP is much higher in many European and Pacific Rim countries. Yet, because of its size, U.S. imports more from other countries and sells as much or more than Germany, the largest exporter. All this buying and selling around the world would require some understanding of trade flows. The why, how and the consequences of trade flows are first part of the course. To pay for the Japanese CD player, French wine, or German sports car an American pays dollars. However, the exporters of these products usually want their domestic currencies so they can make payments to their workers, shareholders, creditors, and governments. Exchange rates, the value of one currency in terms of another, then, become an important subject to study. Furthermore, payments across borders are no longer to settle purchases of goods and services. Most of the flow of international payments is for buying and selling of assets: stocks, bonds, real estate deeds, manufacturing plants, etc. In fact, daily volume of exchange rate transactions around the world is about $3 trillion. Considering the annual value of goods and services produced in the U.S. is about $14 trillion, it takes less than a week of currency trading in the world to match the yearly US GDP. Therefore, the importance of exchange rate determination and its impact on national economies cannot be overemphasized. The second part of the course will deal with that.
Econ 318 Syllabus

TIME and PLACE: OFFICE: OFFICE HOURS:

PHONE: INTERACTION:

Dr. Uur Aker

II. GOALS AND OBJECTIVES This course is an elective for Economics and Management majors. It counts as a Social Science distribution for general education requirements of the college but because of the prerequisites, non-majors rarely enroll in it. International Trade and Finance examines theories of trade, trade policies and protection in the first half of the course and the payments for trade and exchange rate determination in the second half. After completing the trade section, one should be able to explain comparative advantage, specific factors, specific resources foundations of the standard trade model and the economies of scale and imperfect competition explanations of new trade theories, and the workings of tariffs and quotas. After completing the finance section, one should be able to explain Balance-of-Payments, exchange rate determination in the foreign exchange market, the impact of money on exchange rates, the short run and long run behavior of exchange rates, fixed vs. floating exchange rates and historical developments. III. COURSE EXPECTATIONS 1. TEXT: Krugman, Paul R. and Maurice Obstfeld, International Economics: Theory and Policy, Eighth edition. (Reading, MA: Addison-Wesley, Longman. 2009.) This text is used in many undergraduate, graduate economics and MBA programs. Even if it may be very challenging at times, you will be happy to have worked with it if you end up taking a graduate course in International Economics. 2. ASSESSMENT: I have scheduled seven tests and deadlines for the assigned problems from each chapter. The tests will primarily be short answer type with heavy reliance on graphs. I also assigned exercises and research projects from the textbook web site. Chapter problems should be discussed with others before putting down the answer. However, if I get identical answers for a problem from two people, both will get zeroes for that problem. In other words, work and discuss together what is being asked, how to answer it but write it down individually. 3. ATTENDANCE: You are required to attend all classes. If you miss a class, your grade for the course is reduced by 0.33%. Three absences would lower your grade, say, from 87 to 86, or, from B+ to B! Knowing that some -- maybe all -- absences can be the consequence of unforeseen circumstances, I do allow you to make-up absences. See Homework below at IV.3. Remember, College is not just going to classes and doing the assignments. Please utilize as many opportunities available for you here as you can. Once you are out of college and working and raising a family your options for grabbing opportunities will be severely curtailed. Go to as many convocations, concerts, plays, etc. as you can. Some of the happenings during the Fall Semester are listed under Calendar in Hiram College's home page.
Econ 318 Syllabus

Dr. Uur Aker

IV. ASSESMENT AND EVALUATION 1. GRADE DISTRIBUTION: 95 - 100 87 - 90 79 - 80 71 - 74 63 - 66 55 - 58 2. A B+ BC D+ D91 83 75 67 59 094 86 78 70 60 54 F AB C+ CD

TESTS There are seven tests scheduled including the Take Home and the Final. Each will carry 12.5% of the total grade adding up to 87.5%. HOMEWORK I expect 80 questions answered throughout the semester to fulfill the homework requirement. Homework will comprise 12.5% of the final grade and everyone who submits 80 answers will get the full credit regardless of the quality of the answers. These questions are preparation for the tests. The solutions to the homework problems at the end of each chapter will be available before each Test. That means I do not accept homework assignments after the posting. I have picked approximately 80 questions to guide you in your choices but you may pick other questions. The web exercises offered at the textbook web site (e.g., http://wps.aw.com/aw_krgmnobstf_interecon_8/84/21576/5523516.cw/index.html) are acceptable as part of the homework. The questions and web applications I picked will have a better chance of appearing in some form in the Tests. Of course, most of you know that you can submit more than 80 questions for extra credit or to erase absences (4 questions per absence). Homework assignments are best tackled collectively. I do encourage you to work in a group and discuss the problem. However, plagiarism is a very serious offense and academic honesty is the basis of our trust for knowledge. Therefore, you should work together but should not submit the same answer, format, and language in your chapter problems. After discussing the problem and the way to answer it, I want each person, individually, to write it in their own words. You can increase the homework grade by taking the online quiz of the chapter and sending the correct result to me.

3.

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ATTENDANCE Attendance is mandatory. Each absence will cost you 0.33% of your final grade. See III3 above.

V. RESOURCES The textbook web site provides many links related to economics. Here are some others. Some of them are overlapping with the textbook links. Here are some web sites related to economics. Federal Reserve sites: http://www.federalreserve.gov/
Econ 318 Syllabus

Dr. Uur Aker

http://www.stls.frb.org/fred/ http://www.frbsf.org/ http://www.phil.frb.org/ http://www.bos.frb.org/ http://www.dallasfed.org/ http://www.frbatlanta.org/ http://www.rich.frb.org/ http://www.clev.frb.org/ http://www.kc.frb.org/ http://www.chicagofed.org/ http://www.kc.frb.org/fed101/ http://www.newyorkfed.org/ http://woodrow.mpls.frb.fed.us/econed/class/econsite.html US Government sites: http://www.bea.doc.gov/ http://www.govspot.com/ http://stats.bls.gov/eag/eag.us.htm?H1 http://www.fedstats.gov http://www.census.gov http://stats.bls.gov/blshome.html http://www.irs.ustreas.gov/prod/tax_stats/index.html http://gopher.cbo.gov:7100/1/reports/online http://www.access.gpo:gov/su_docs/budget98/maindown.html http://www.whitwhouse.gov/fsbr/esbr.html World Bank: http://www.worldbank.org/poverty/wdrpoverty/ http://www.worldbank.org/ http://www.worldbank.org/research/growth/ http://rsqe.econ.lsa.umich.edu/ Private informational: http://economics.miningco.com/ http://www.economics.ltsn.ac.uk/interneteconomist/index.htm http://www.economist.com/markets/ http://www.economist.com/index.cfm?CFID=143098&CFTOKEN=58326587 http://www.swcollege.com/bef/mceachern/economist.html http://www.fool.com/index.htm http://econlinks.com/ http://www.marietta.edu/~delemeeg/expernom.html http://www.economagic.com/ http://www.economicsearch.com/ http://www.globalexposure.com http://fairmodel.econ.yale.edu http://netec.wustl.edu/JokEc.html http://wconwpa.wustl.edu/econFAQ.html http://www.orst.edu/Dept/pol_sci/sahr/ http://www.NewsEngin.com/neFreeTools.nsf/CPIcalc http://www.oecd.org http://www.oanda.com/cgi-bin/ncc http://govinfo.kerr.orst.edu/cffr_stateis.html http://garnet.berkeley.edu:3333/budget/budget.html Government web pages provide a wealth of information. You can access those related to economics and business by going to the library web page from Hiram's web site and
Econ 318 Syllabus

Dr. Uur Aker

clicking on the Government documents and scrolling down to "Economics/Business." VI. SCHEDULE:
WEEK Jan 9-13 Jan 16-20 Jan 23-27 Jan 30-Feb 3 Feb 6-10 Feb 13-17 Feb 20-24 Feb 27-Mar 2 Mar 5-9 Mar 12-16 Mar 19-23 Mar 26-30 Apr 3-7 Ch. 14 due: 1-4, 6,8-10. Web 2 Test 14-15;Ch.15 due:1,3,5,6. Web 15.1,4 Ch.16 due:2,6,8,10.Web 16.1,3 Ch. 17 due: 1, 5, 6. Test 8-9. Ch. 9 due: 2, 7-9 Web 9.3 Ch. 13 S PRI NG BREAK Ch. 1 MLK Day Test 1-3. Ch.3 due:1-3,6-8. Web 3.1,3.3 Ch. 4 due: 2,4,6. Web 4.1, 4.4 Ch. 5 due:1,2,5-11. Web 5.1 Ch. 8 due: 5,6,8,9,10 Web 8.1 Ch. 12 Ch. 12 due:2-4,6,8-10 Web.2 SPRI NG BREAK Test 12-13; Ch.13 due:2,4,6,8,9 Web 1,4 S PRI NG BREAK MONDAY Ch. 2 Ch. 2 due: 4, 5. Web 2.3 Ch. 4 Ch. 6 Test 4-6. Ch. 6 due: 2-5, 8, 10. Web 6.1 WEDNESDAY Ch. 3 Ch. 4 FRIDAY

VII. DISCLAIMER Plans are wishes. Not all wishes do come true. Those with the wisdom of ages warn us about the curse of wishes that do come true. We may change parts of this syllabus as we see fit in the course of the semester. For the sake of participatory democracy, I promise to include the class in the decision-making before I make any substantive changes.
VIII. LEGAL STUFF Non-Discrimination Policy Hiram College is committed to equality of opportunity and does not discriminate in its educational and admission policies, scholarship and loan programs, and athletic and other school-administered programs on the basis of race, color, national origin, religion, gender, sexual orientation, age, or disability. The College will not tolerate harassment, prejudice, abuse, or discrimination by or of any of its students, faculty, or staff. Communication with Parents Hiram College encourages students to speak directly with faculty regarding course content and performance. Students are also encouraged to speak with their parent(s), particularly if the student remains dependent on parent(s) for financial support. Faculty may choose to speak with parents, but generally, faculty will require a written FERPA waiver to be signed by the student before speaking with a students parent. FERPA waivers may be found at the Registrars Office in Teachout-Price, or online at http://www.hiram.edu/current/offices/registrar/ferpa2.html. Disability Support Services for Students with Special Needs To arrange for support services, a student must submit appropriate, current, detailed documentation to the Director of Counseling, Health and Disability Services (CHDS) together with the completed online service request form: http://www.hiram.edu/current/studentservices/disabilityservices.html . After verification and with the students consent, the Director of CHDS will notify the students faculty of the appropriate accommodation services. Faculty are not permitted to make accommodations without the authorization of the Director of CHDS. Hiram College adheres to Section 504 of the Rehabilitation Act to provide requested services for disabled students as specified by the requirements contained in the Americans with Disabilities Act (ADA) policy guidelines. The Director CHDS is located in the Julia Church Health Center (330-569-5952) P.O. Box 67, Hiram OH 44234. Academic Dishonesty There are many forms of academic dishonesty, including plagiarism, the giving or receiving of help in any form on an examination, the sale or purchase of papers and test materials, the abuse of computer privileges and regulations, the misuse or abuse of online or library resources, and any other action which debases the soundness Econ 318 Syllabus

Dr. Uur Aker

of the educational process. Any student who violates the integrity of the academic process will be subject to punishment, including possible dismissal from the College. Hiram College believes that the development of intellectual honesty is at the heart of a college education. The process of education is severely compromised if we cannot depend on the academic integrity of each member of the community. Moreover, the principles of academic honesty are aligned closely with the principles of good scholarship and research, principles of critical thinking and reasoning, and the standards of professional ethics. Thus, students who fail to practice academic honesty not only risk losing the trust of the academic community, they also fail to develop the most essential skills and abilities that characterize a college graduate. Faculty members, librarians and staff are expected to report all instances of academic dishonesty to the Associate Dean of the College, who will provide advice on an appropriate action. Grade Appeals Academic performance is to be judged solely by individual faculty members. Grades are not subject to alteration based on the amount of effort exerted by, or past performance of, a student. Faculty are expected to provide performance criteria (such as attendance policies, deadlines, assignment expectations, etc.) as part of course syllabi or distributed assignments, but assessment of student performance in meeting said criteria is for the individual faculty member to determine. If a student believes that criteria were ignored, or that work submitted was not included, the student should consult the Student Academic Responsibilities and Performance section of the Hiram College Catalog at home.hiram.edu. Therein is provided the process for grade appeals. Please note that all grade appeals reside wholly with the professor alone until the official posting of grades by the Registrar.

Econ 318 Syllabus

Dr. Uur Aker