1. Economics 328: International Finance
Professor Devereux
Queens College CUNY, Fall 2012
Course Outline
Economics 328 is a course in International Macroeconomics. We will discuss the balance
of payments, exchange rates and monetary policy in open economies. The emphasis is on
developing tools to help us understand real world issues. Throughout, we will draw on
the experience of the US and other economies. Thus, students are encouraged to read the
financial pages of the New York Times, the Financial Times and the Wall Street Journal.
As time permits, we will look at current events such as the Euro crisis, the rise of China,
the effects of the US government deficits on inflation and the current account, the
stimulus and recent problems in world financial markets. We will also consider
economies such as Greece and Venezuela as the semester progresses.
I use Blackboard. You can access this page from the QC website. For more details see:
http://qcpages.qc.edu/edtech/BlackBoard/loggingOn.html
The site will have the syllabus along with class announcements and problem sets. It will
also have required readings. You should check it regularly.
Office Hours
My Office is in Powder Maker on the Third Floor inside the economics department.
Drop-in Monday or Wens, 11.00-12.00. I am available at other times by appointment.
My phone number is 997-5441. I can be reached by email at: john.devereux@qc.cuny.edu

2. Economics 328
Prerequisites
Economics 101 or 103 and 102 or 104 and 206 or 226; English 110. You must have these
classes or you will be dropped. There are no exceptions.
Responsibilities and Requirements
As your professor, my responsibilities are to come to class prepared and on time; respond
to and encourage questions and other appropriate class participation; grade exams; be
available during office hours and for scheduled appointments; and to stimulate an
enthusiasm for economics and for learning generally.
Your responsibilities are to attend and participate in lectures twice per week; complete
the assignments; participate in class; take the midterm and final examination. You are
also required to come to class on time. If necessary, I will strictly enforce this
requirement.
I will base your course grade on your performances on a comprehensive final and a
midterm. Be warned, I do not give multiple-choice exams. There are no incompletes.
Exams
There is a midterm and a final. The midterm accounts for forty percent of your grade.
The final is cumulative and accounts for sixty percent. The tentative data for the midterm
is October 12. The midterm will cover the material presented in lectures, and the
assigned readings through and including the lecture before the exam. Each exam will be
closed book, and will consist, for the most part, of problems. Let me repeat, there will be
no multiple-choice questions.
Old Exams
I will post old exams on Blackboard. Be warned, I do not repeat questions and the class
changes each year. The exams are a guide only. Do not memorize them. There are also
four problem sets to help you prepare for the exams.
2

3. Economics 328
There are no make-up midterm exams. As mentioned before, there are no exceptions to
this rule. Students who miss a midterm for any reason must communicate with me by
phone by 5:00 p.m. on the day of the exam. Turning to exams, I grade your answers
solely upon their content and not upon their intent. This means that I do not grade what
you "mean to say" but what you actually write, (even if you "knew the answer but just
couldn't say it right"). This also means that answers that are illegible, rambling, or poorly
organized will not receive high marks. Further, it means that merely completing all exams
will not be sufficient to earn a passing grade. Just turning up is not enough!
Academic Honesty
In fairness to students who put in an honest effort, I will treat academic dishonesty
harshly. Any evidence of cheating will result in a score of zero (0) on that exam.
Cheating on the final will result in an F for the course. Furthermore, I will report all
cheating to the proper authorities. Cheating includes but is not limited to bringing notes
or written materials into an exam, using notes or written materials during an exam,
copying off another person's exam, allowing someone to copy off of your exam, and
having someone take an exam for you, text messaging etc. Remember I take cheating
seriously. I will not think less of you if you do poorly academically but I will not tolerate
cheating.
Course Text: International Macroeconomics (2012) By Robert C. Feenstra and Alan. M.
Taylor. Worth. Second Edition.
If you intend to take Eco 326 you might want to consider International Eonomics (2012)
By Robert C. Feenstra and Alan. M. Taylor. Worth. Second Edition. This covers both
326 and 328.
Feensta and Taylor are outstanding economists and the text is first rate. You can
purchase the text at the QC bookstore or online. Their web site:
http://worthpublishers.com/Catalog/product/internationalmacroeconomics-secondedition-
feenstra/tableofcontents
3

4. Economics 328
You might also read Boomerang (2011) Norton by Michael Lewis. This bestseller covers
many of the issues that we deal with in this class.
Readings
Throughout the class, I will assign articles for class discussion. You can download them
from the class webpage at Blackboard.
Learning Objectives
The learning objectives for this course are to understand the fundamentals of open
economy macroeconomics (by attending lectures and reading the textbook). Second, to
apply the tools learned in the class to analyze current economic events (by completing the
assignments). Third, explain what you have learnt (by completing the examinations and
through in-class discussions).
How to do well in Eco 328
Attend all the Classes
By "attend," I do not just mean just show up. Try to listen and participate. Classes are
important, as I do not follow the book closely. Nor do I take my exam questions for the
books. Arrive on time and do not leave class before I am finished lecturing without
asking permission first. This is basic manners. Listen carefully and take notes. Finally,
ask questions. If you feel confused, stick your hand up. Do not hesitate to ask for more
details, or to bring-up side issues.
Do the Readings
Attending lectures is no substitute for reading the textbook and the assigned readings. The
lectures give you a broad overview; the readings supply details and, if read with care, will
"drive home" the main points. You should do the readings before the lecture that they are
supposed to accompany. The lectures will make more sense this way.
4

5. Economics 328
Study
I know that “study” along with “read” are four letter words that shock and awe. Sorry,
you have to do some work. Here are a few suggestions: Go over and re-write your lecture
notes. I would also suggest that you do the bulk of your studying alone. Group studying
is a good idea for a last-minute review, and for clarifying points of confusion, but it is a
poor substitute for studying alone. (If people study together, they end up making the same
mistakes.)
Do not focus on old exams. Yes you will have old exams on line. But I do not repeat
questions. Students who rely on old exams do poorly. Besides, you might actually learn
something by doing some work.
Come to Office hours
I may also be available at other times, by appointment. If you come to office hours during
the last week of class to inform me you do not understand anything then it will be too
late.
Course Outline
This provides a broad outline of the course. I will change the order as the class proceeds.
I will add readings as we go along.
1. Introduction
Chapter 1.
Reading 1: The end of an Empire?
Reading 1a: The end of Europe?
2. Exchange Rates, Interest Rates and Interest Parity
Chapter 2.
Chapter 11, section 2.
3. Purchasing Power Parity
Chapter 3.
Chapter 11, section 1.
5

6. Economics 328
Reading 2: Burger-Thy-Neighbor Policies: from the Economist, February 2009
4. Floating Exchange Rates
a. The Long Run
Chapter 3.
Reading 3: Laffer on Inflation from the Wall Street Journal.
b. The Short Run
Chapter 4.
Reading 4: Monetary Policy versus Fiscal Policy. The Stimulus, Krugman versus Cooley
and Roper.
Midterm (Tentatively October 8)
5. Fixed Exchange Rates
Chapters 8 and 9.
Reading 5. When to float.
Reading 6: Robert Mundell, (2000) “A Reconsideration of the Twentieth Century”
American Economic Review
Reading 7: Krugman on China.
6. The Euro and Optimum Currency Areas
Chapter 10.
Reading 8. The Greek Tragedy. The Financial Times
7. Understanding the Current Account and the Balance of Payments
Class Handout.
Chapter 5. Skim Chapter 6.
Final Exam.
6