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JOHN CABOT UNIVERSITY

COURSE CODE: "EC 250"
COURSE NAME: "Economic Issues of the European Union"
SEMESTER & YEAR: Spring Semester 2012
SYLLABUS

INSTRUCTOR: Asdrubali Pierfederico
EMAIL: [email protected]
 HOURS: MW 19:00-20:15
TOTAL NO. OF CONTACT HOURS: 45
CREDITS: 3
PREREQUISITES: Prerequisites: EC 201, EC 202
OFFICE HOURS: M W, 6:15pm-6:45pm & by appointment
COURSE DESCRIPTION:
An economic and institutional analysis of European Monetary Unification.
SUMMARY OF COURSE CONTENT:
        
    1. The Costs and Benefits of Monetary Union
    2. The transition to a Monetary Union
    3. The European Central Bank
    4. Monetary Policy under EMU
    5. Fiscal Discipline and Flexibility in EMU
    6. Budgetary Policies of the EMU
LEARNING OUTCOMES:
 
  1. Learning how monetary unions work, and how they have been accomplished
  2. Improving communication skills and critical reading of economic news on EMU
TEXTBOOK:
Book TitleAuthorPublisherISBN numberLibrary Call NumberCommentsFormatLocal BookstoreOnline Purchase
The Economics of Monetary Union, 8th EditionPaul De GrauweOxford University Press978-0-19-956323-4     
REQUIRED RESERVED READING:
NONE

RECOMMENDED RESERVED READING:
NONE
GRADING POLICY
-ASSESSMENT METHODS:
AssignmentGuidelinesWeight
Midterm exam 35%
Essay 20%
Final exam 45%

-ASSESSMENT CRITERIA:
All exams will be composed of 3 parts: multiple choice questions, analytical problems, and an essay question. Each part contributes different points to the exam grade.
-ATTENDANCE REQUIREMENTS:
Class attendance is strongly recommended, as lectures may differ from the textbook.
ACADEMIC HONESTY
As stated in the university catalog, any student who commits an act of academic dishonesty will receive a failing grade on the work in which the dishonesty occurred. In addition, acts of academic dishonesty, irrespective of the weight of the assignment, may result in the student receiving a failing grade in the course. Instances of academic dishonesty will be reported to the Dean of Academic Affairs. A student who is reported twice for academic dishonesty is subject to summary dismissal from the University. In such a case, the Academic Council will then make a recommendation to the President, who will make the final decision.
STUDENTS WITH LEARNING OR OTHER DISABILITIES
John Cabot University does not discriminate on the basis of disability or handicap. Students with approved accommodations must inform their professors at the beginning of the term. Please see the website for the complete policy.
SCHEDULE

Topics outline

q       Review of the AD/AS model in an open economy

The workhorse model of macroeconomics, both in the short and in the long run, for open economies; Representing macroeconomic equilibrium and how monetary and fiscal policy affect it.

  • Slides: aggregate demand.ppt; economic policy.ppt; Phillips curve.ppt
  • Faruqee, H. (2004) “Euro Turns Five: Europe’s Grand Experiment”, Finance and Development, 41(2), 14-15.

 

q       The Costs of Monetary Union.

The theory of Optimum Currency Areas and the economic implications of asymmetric shocks.

  • Slides: ch01.ppt
  • De Grauwe, P. (2009) Economics of Monetary Union, Oxford: Oxford University Press (Chapter 1).
  • Mongelli, F. P. (2002) “’New’ Views on the Optimum Currency Area Theory: What is EMU Telling us”; ECB Working Paper 138. (Sections 1-3)
  • Buiter, W. (2000) "Optimal Currency Areas: Why Does the Exchange Rate Regime Matter?", Scottish Journal of Political Economy, 47: 213-250
  • Committee on Stabilisation Policy (2002), Stabilisation Policy in the Monetary Union, Swedish Official Government report, March.

 

q       The Theory of Optimum Currency Areas: a Critique.

Is an asymmetric shock likely to occur within a monetary union?; Trade integration and regional concentration; Can currency realignments offset the consequences of an asymmetric shock?

  • Slides: ch02.ppt; Stability.doc
  • De Grauwe, P. (2009) Economics of Monetary Union, Oxford: Oxford University Press (Chapter 2).
  • Mongelli, F. P. (2002) “’New’ Views on the Optimum Currency Area Theory: What is EMU Telling us”; ECB Working Paper 138. (Sections 4-7)
  • Patterson, B. and S. Amati (1998) “Adjustment to Asymmetric Shocks” European Parliament working paper ECON 104.

 

q       Benefits of a Common Currency

Micro and macroeconomic benefits of a common currency; Endogenous currency areas.

  • Slides: ch03.ppt
  • De Grauwe, P. (2009) Economics of Monetary Union, Oxford: Oxford University Press (Chapter 3).
  • Trichet, J.-C. (2005) “Economic and financial integration in EMU and implications for monetary and economic policies”, Speech.

 

q       Costs and Benefits of a Common Currency Compared.

The “monetarist” and “keynesian” view of EMU; Lessons from the United States for EMU; Is Europe an Optimum Currency Area?; The challenge of Enlargement

  • Slides: ch04.ppt
  • De Grauwe, P. (2009) Economics of Monetary Union, Oxford: Oxford University Press (Chapter 4).
  • Mongelli, F. P. (2002) “’New’ Views on the Optimum Currency Area Theory: What is EMU Telling us”; ECB Working Paper 138. (Appendix 1)
  • Bayoumi, T. and B. Eichengreen (1993) “Shocking Aspects of European Monetary Integration” in Francisco Torres and Francesco Giavazzi (eds.) Growth and Adjustment in the European Monetary Union, Cambridge: Cambridge University Press.

Topic for Discussion: Should Italy drop the Euro?

 

q       The Transition to a Monetary Union.

The Maastricht treaty and the convergence criteria; The Stability Pact; The “Ins” and the “Outs”

  • Slides: ch07.ppt
  • De Grauwe, P. (2009) Economics of Monetary Union, Oxford: Oxford University Press (Chapter 7).

 

q       The European Central Bank.

Institutional design and objectives of the European Central Bank; Policy credibility and central bank independence.

  • Slides: ch08.ppt
  • De Grauwe, P. (2009) Economics of Monetary Union, Oxford: Oxford University Press (Chapter 8).
  • European Central Bank (2002) “The European Central Bank”, brochure.

Topic for Discussion: Does greater central bank independence lead to lower inflation?

 

q       Monetary Policy under EMU.

Asymmetric disturbances, differences in national financial and labour markets, and monetary policy under a common currency; the Monetary Policy Strategy of the ECB.

  • Slides: ch09.ppt; Should the UK join the EMU.doc
  • De Grauwe, P. (2009) Economics of Monetary Union, Oxford: Oxford University Press (Chapter 9).
  • European Central Bank (2004) “The Monetary Policy of the ECB”.
  • Dornbusch, R., C. Favero, and F. Giavazzi (1998) “Immediate Challenges for the European Central Bank”, Economic Policy 13(26), 17-64.
  • Sapir, A. and M. Buti (2001) “EMU in the Early Years: Differences and Credibility”, CEPR Discussion Paper 2832

Topic for Discussion: Should Britain join the Euro?

 

q       Fiscal Discipline and Flexibility in EMU.

National stabilization policies in a monetary union; the case for fiscal federalism; Does a stable monetary union require binding guidelines for fiscal policy?; The Stability and Growth Pact

  • Slides: ch10.ppt
  • De Grauwe, P. (2009) Economics of Monetary Union, Oxford: Oxford University Press (Chapter 10).
  • Buti, M., S. Eijffinger, and D. Franco (2003) “Revisiting EMU’s Stability Pact: A Pragmatic Way Forward” Oxford Review of Economic Policy 19(1), 100-111.
  • Feldstein, M. (2005) “The Euro and the Stability Pact”, NBER working paper 11249.

Topic for Discussion: Should EMU do away with the Stability and Growth Pact?

 

q       Budgetary Policies of the EU

How common policies, such as the agricultural, regional, infrastructural, as well as redistribution policies are financed and implemented, and how efficiently.

·         Slides: EU budget.ppt

·         Buti M. and M. Nava (2003) “Towards a European Budgetary System”, mimeo.

Topic for Discussion: Should the EU budget be downsized?