October 20
More Shots in the Trade War
China imposes a new tariff on nylon in a tit for tat trade war with the U.S.
Textbook References:
Page 8 “Principal 5: Trade Can Make Everyone Better Off”
Chapter 3 “Interdependence and the Gains from Trade”
Pages 183-185 “The Effects of a Tariff”
Pages 728-730 “Trade Policy”
October 18
China's Dollar Problem
Kenneth Rogoff explains why the Chinese are worried about the value of the dollar.
Textbook References:
Pages 692-702 “The International Flows of Goods and Capital”Pages 718-721 “The Market for Foreign-Currency Exchange”
Pages 732-733 “Capital Flows from China”
October 5
A Victory for Mundell-Fleming
The size of the fiscal multiplier depends heavily on whether exchange rates are fixed or flexible.
Textbook References:
Chapter 32 “A Macroeconomic Theory of the Open Economy”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-796 “Using Policy to Stabilize the Economy”
Pages 830-832 “Should Monetary and Fiscal Policymakers Try To Stabilize the Economy?”
June 15
Samuelson’s Words of Warning
Paul Samuelson worries that China may lose its appetite for dollars.
Textbook References:
Chapter 31 “Open-Economy Macroeconomics: Basic Concepts”
Chapter 32 “A Macroeconomic Theory of the Open Economy”
Feb. 24
Mixed Messages
The U.S. wants China to keep buying our treasury bonds, which has the effect of keeping the value of the dollar high against the Yuan. But the U.S. also wants China to raise the value of the Yuan against the dollar.
Textbook References:
Pages 692-702 “The International Flows of Goods and Capital”
Pages 724-733 “How Policies and Events Affect an Open Economy”
Feb. 16
China Favors Free Trade, Even if U.S. Doesn’t
China promises to avoid protectionism, even though the U.S. stimulus bill includes protectionist policies.
Textbook References:
Chapter 3 “Interdependence and the Gains from Trade”
Chapter 9 “Application: International Trade”
Pages 728-730 “Trade Policy”
Feb. 11
Ray Fair on Stimulus
Ray Fair reports that his macroeconomic model predicts that the stimulus bill will create short-run gains and long-run pain.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 589-591 “Policy 3: Government Budget Deficits and Surpluses”
Pages 591-593 “The History of U.S. Government Debt”
Pages 724-728 “Government Budget Deficits”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-796 “Using Policy to Stabilize the Economy”
Pages 830-832 “Should Monetary and Fiscal Policymakers Try To Stabilize the Economy?