This course will cover essentially three topics. In the first part we introduce basic concepts and theories of modern
international macroeconomics, like the determination of the current account, international prices, and the role of international financial markets. The framework of the analysis is the dynamic general equilibrium model of the international economy. In the second part we present an application of the previous theories that is the international real business cycle research. The goal of this research is to understand and explain business fluctuations and their international transmission.
We will devote some time to calibration and numerical methods to solve dynamic economies. In the third part we present another application of the international theories, which is the one outlined in the research program of the new open
macroeconomics.

Part 1
1) The one-good inter-temporal model.
Obstfeld and Rogoff Chapters 1-3.
2) The two goods model.
Backus, D. P. Kehoe and F. Kydland (1992) “Relative Price Movements in Dynamic General Equilibrium Models of
International Trade’’, NBER W.P. No. 4243, December.
Backus, D., G. Smith (1993), “Consumption and the Real Exchange Rate in Dynamic Exchange Economies with non
Traded Goods’’, Journal of International Economics, 35.
Obstfeld M., Rogoff K. (2000), “The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?’’.

Part 2
1) International real business cycles.
a) Basic facts and a methodological description of the approach.
Backus, D., P. Kehoe and F. Kydland (1993) “International Business Cycles: Theory and Evidence’’.
b) Puzzles and new directions.
Baxter, M. and M. Crucini, (1995), “Business Cycles and the Asset Structure of Foreign Trade'', International Economic Review.

Part 3
1)One-period predetermined prices.
Obstfeld and Rogoff, chapters 10-11.
Corsetti G. and P. Pesenti, (2000), “Welfare and Macroeconomic Interdependence”, Quarterly Journal of Economics.
2) Dynamic price setting with complete exchange rate pass-through and risk sharing.
Gali, J. and T. Monacelli, (2005), “Monetary Policy and Exchange Rate Volatility in a Small Open Economy,” Review of
Economic Studies.
3) Optimal monetary policy.
Benigno G. and P.P. Benigno, (2003), “Price Stability in Open Economies’’ Review of Economic Studies (2003).
E. Faia and T. Monacelli (2008) “Optimal Monetary Policy in a Small open Economy with Home Bias” Journal of
Monetary Economics.