International Economics I

Semester: Fall semester - HS 2020

ECTS: 15

Lecturers: Doris Oberdabernig (Mathematics and Statistics, Microeconomics &

Econometrics), Patrick Tomberger (Microeconomics & International
Trade), Octavio Fernández-Amador (Macroeconomics)

Dates:
Wednesdays: 10:00 – 12:00 (some sessions start at
Fridays: 9:00) 10:15 – 12:15 & 14:00 – 16:30
Some exceptions. See calendar for exact dates and times

Audience:
 Master of Advanced Studies of International Law and Economics (MILE) Students
– Compulsory
 Joint LL.M. / Diploma of Advanced Studies Trade and Investment Law (TRAIL+)
Students - World Trade Institute / Faculty of Law, Unibe - Compulsory
 This course is not open to MILE a la Carte

Page 1 of 43
CONTENTS
Contents .......................................................................................................................................... 2
Course description ......................................................................................................................... 4
Detailed description by subject................................................................................................... 6
Lecturers .......................................................................................................................................... 9
Learning objectives .....................................................................................................................11
Recommended literature ...........................................................................................................13
Exams and grades .......................................................................................................................18
Course overview ..........................................................................................................................19
Lessons 1.S1, 2.S2, 3.S3, 4.S4 ........................................................................................................22
Lesson 5.Mi1 ..................................................................................................................................23
Lesson 6.Mi2 ..................................................................................................................................24
Lesson 7.E1 ....................................................................................................................................25
Lesson 8.Mi3 ..................................................................................................................................26
Lesson 9.E2 ....................................................................................................................................27
Lesson 10.Ma1 ..............................................................................................................................28
Lesson 11.Mi4 ................................................................................................................................29
Lesson 12.Mi5 ................................................................................................................................30
Lesson 13.E3 ..................................................................................................................................31
Lesson 14.Ma2 ..............................................................................................................................32
Lesson 15.Mi6 ................................................................................................................................33
Lesson 16.Mi7 ................................................................................................................................34
Lesson 17.E4 ..................................................................................................................................35
Lesson 18.Ma3 ..............................................................................................................................36
Lesson 19.T1 ...................................................................................................................................37
Lesson 20.T2 ...................................................................................................................................38
Lesson 21.Ma4 ..............................................................................................................................39
Lesson 22.T3 ...................................................................................................................................40
Lesson 23.T4 ...................................................................................................................................41
Lesson 24.E5 ..................................................................................................................................42
Lesson 25.Ma5 ..............................................................................................................................43
Lesson 26.Ma6 ..............................................................................................................................44
Lesson 27.T5 ...................................................................................................................................45
Lesson 28.E6 ..................................................................................................................................46
Lesson 29.Ma7 ..............................................................................................................................47
Lesson 30.T6 ...................................................................................................................................48
Lesson 31.Ma8 ..............................................................................................................................49
Lesson 32.T7 ...................................................................................................................................50
Lesson 33.Ma9 ..............................................................................................................................51
Page 2 of 43
COURSE DESCRIPTION
This is an introductory course to International Microeconomics, International Trade,
International Macroeconomics, and the basics of econometrics in combination with the
use of the statistical software STATA. Before the beginning of the course there will be an
introductory course on Mathematics and Statistics.
Students will be introduced to the macroeconomic aspects of a country's international
economic transactions and will come to understand important concepts like the goods
and financial markets, currency markets, balance of payments, the exchange rate,
purchasing power parity, and interest rate parity. The material delivered should enable
the students to better understand and interpret recent macroeconomic and financial
developments in the context of a globalized economy, and to understand the
implications for government policies and markets. Economic policy options available to
governments in the present context of economic globalization, in particular with respect
to international currency systems will also be addressed.
A further goal of the course is to gain a basic understanding of the most important
economic theories on micro-economics and international trade and to become familiar
with the stylized facts on international trade. Students should acquire enough
knowledge to be able to formulate a well-founded opinion about specific topics in the
international trade literature such as the arguments for and against protection in the era
of global value chains and the position of developing countries in international trade. To
enable students to understand the basic economics international trade literature some
introductory topics in economics will also be discussed such as demand and supply,
consumer theory, and market structures.
The rationale underpinning this econometrics portion of the course offer is two-fold: First,
learning about empirical approaches to the study of international trade will enable
students to interpret output tables in academic research papers and work with their
own datasets. The lessons learned from the econometrics module can then be used in
subsequent economics courses in the MILE programme and provide an added-value to
students when working on take-home essays or their specific thesis projects. Second,
beyond the confines of the MILE programme, students will acquire skills in using the
statistical software STATA, which is in high demand among employers both in the private
and public sector. The course will begin with the basics of data analysis where students
will learn how to feed data into the statistical software STATA, to calculate descriptive
statistics and to plot graphics of interest. These introductory lectures will be followed by
lectures on the simplest linear regression models and the procedure of statistical
inference. Throughout the course, emphasis will be placed on the intuition behind
econometric analysis. The main goal will be to communicate to students the merits of
using a certain model as well as the main procedures through which results are
obtained.
Page 3 of 43
DETAILED DESCRIPTION BY SUBJECT
Math and Statistics
The course revises topics on mathematics and descriptive statistics that are relevant to
understand the economic analysis studied in the modules of the Master of International
Law and Economics with focus on economic topics.

Microeconomics
The goal of the course is to gain a basic understanding of the most important economic
theories on micro-economics. This will provide students with a foundation of
microeconomic concepts and will enable them to understand the basic economics in
the international trade literature. For this, some introductory topics in economics will be
discussed such as demand and supply, consumer theory, and market structures. After
the course, students should be able to explain the main concepts and theories on
micro-economics and be able to follow the course on international trade.
The course comprises 7 lectures of 2-3 hours each (16 hours in total) plus 3 hours for the
final exam. The module is structured as follows: The first session will be devoted to a short
revision of the basics of supply and demand and to study consumer behavior. The
second session will focus on individual and market demand, and the third session will
focus on production. In sessions four and five the discussion will focus on the cost of
production and the profit maximizing behavior of firms. In session six all the concepts
discussed so far will be applied to do an analysis of competitive markets. The final
session will be devoted to discuss the concept of market power, with a special focus on
monopolistic competitive markets.
The main reference is the textbook by Pindyck and Rubinfeld on Microeconomics.
Students are expected to work through the book chapters indicated in this syllabus
before class in order to facilitate their comprehension of the material to be discussed. In
class, the material is discussed together thoroughly.

Econometrics
The course aims at introducing students to the basics of econometrics in combination
with the use of the statistical software STATA. The rationale underpinning this course offer
is two-fold: First, learning about empirical approaches to the study of international trade
will enable students to interpret output tables in academic research papers and work
with their own datasets. The lessons learned from the econometrics module can then be
used in subsequent economics courses in the MILE programme and provide an added-
value to students when working on take-home essays or their specific thesis projects.
Second, beyond the confines of the MILE programme, students will acquire skills in using

Page 4 of 43
the statistical software STATA, which is in high demand among employers both in the
private and public sector. These considerations resonate well with the feedback from
former MILE cohorts: The students who enrolled in the previous econometrics modules
indicated that they see quantitative approaches to international trade as a stepping
stone for their thesis projects or potential future employment.
The course comprises 6 lectures of 2 hours each (12 hours in total) plus a final
examination. The module is structured as follows: The first session will be devoted to the
basics of data analysis. Students will learn how to feed data into the statistical software
STATA, to calculate descriptive statistics and to plot graphics of interest. Students are
required to practice the use of the learned commands and apply them in practical
exercises. The introductory lecture will be followed by lectures on the simplest linear
regression models and the procedure of statistical inference. Throughout the course,
emphasis will be placed on the intuition behind econometric analysis. The course is
intensive and students are required to revise the material at home. The main goal will be
to communicate to students the merits of using a certain model as well as the main
procedures through which results are obtained.
Note: Due to the strong focus on hands-on learning, students must make sure that STATA
is properly installed in their laptops before the beginning of Econometrics classes. The
software will be provided by the WTI.

Macroeconomics
This is an introductory course to the core field of International Macroeconomics:
Balance of Payments and Foreign Exchange Markets. Students will be introduced to the
monetary aspects of a country's international economic transactions. They will get to
know the meaning of important concepts like the balance of payments, the exchange
rate, currency markets, international capital mobility, purchasing power parity, and
interest rate parity. This will enable them to better understand and interpret recent
developments in international financial markets and to understand the implications for
government policies and markets. We shall address the economic policy options
available to governments in the present era of economic globalization, in particular,
with respect to international currency systems (flexible vs. fixed exchange rates,
currency unions).
The main reference is the textbook by Krugman, Obstfeld, and Melitz (KOM, hereafter),
supplemented by the textbook by Blanchard (BLA, hereafter). We will supplement the
textbook with other readings from sources such as academic journals, institutional
reports, outlooks, and specialized news.
The course is organised to provide the theoretical underpinnings and some recent
examples during the lectures. It is required from the students to read the main readings
for each lecture in order to facilitate their comprehension of the material to be

Page 5 of 43
discussed. In class, the material is discussed together thoroughly. It is expected from
students their participation in class and their preparation of the material and exercises
required. We will provide a final review session devoted to prepare the students for the
exam at the end of the week.

International Trade
The goal of the course is to gain a basic understanding of the most important economic
theories on international trade and to become familiar with the stylized facts on
international trade. After the course students should be able to explain the main
concepts and theories discussed in the economic literature on international trade.
Students should also acquire the knowledge to be able to formulate a well-founded
opinion about specific topics in the international trade literature such as the arguments
for and against protection in the era of global value chains and the position of
developing countries in international trade.
This module includes seven lectures of 2 - 3 hours (18 hours in total) plus 3 hours for the
final exam. The first four lectures will make the students familiar with the trade models
based on competitive markets: Ricardo’s model of international trade, the specific
factors model, the Heckscher-Ohlin model and the standard trade model. The following
three lectures will be devoted to “new Trade” theories based on markets with imperfect
competition. Specifically, we will discuss the role of external economies of scale in
international trade and take a closer look at the firm in the global economy. In the last
lecture also the most important instruments of trade policy will be discussed.
The compulsory reading for this module is the textbook of Krugman, Obstfeld and Melitz
on international trade theory. In class we will discuss intensively the chapters indicated in
this syllabus and the students are required to read those chapters before class.

Page 6 of 43
LECTURERS
Doris Oberdabernig
Doris Oberdabernig is a senior researcher and a consultant to the World Trade
Organization (WTO). Before joining the WTI, she worked as teaching and research
associate at the Vienna University of Business and Economics in Austria, and as research
associate at the Austrian Institute of Economic Research. She contributed to projects
funded by the European Commission and the Swiss National Science Foundation, and
worked as consultant for different World Bank projects and for the private sector. Doris
holds a PhD in Economics, and degrees in Political Economy and in International
Economics and Business Sciences from the University of Innsbruck (AT). Her field of
research comprises applied econometrics, political economy, environmental
economics, international economics and development, and she has published in
various international scientific journals.

Patrick Tomberger
Patrick Tomberger is a postdoc researcher at the World Trade Institute located in Bern.
He holds a PhD in economics from the University of Linz (Austria) and degrees in political
economy and political science from the University of Innsbruck (Austria). Before he
joined the WTI, he worked as a predoc research assistant at the University of Linz. He also
worked in projects funded by the Swiss National Science Foundation (SNSF) and as
consultant for research projects of the World Bank Group. His main research interests
include international economics, specifically global value chains and international
trade, environmental economics, and multi-region input-output analysis. In that fields he
has published in the peer-reviewed journals Applied Economics, Ecological Economics,
Economics Letters, Environmental and Resource Economics, and The World Economy.

Octavio Fernández-Amador
Octavio Fernández-Amador is a senior researcher at World Trade Institute and a
consultant to the World Trade Organization (WTO). He holds a PhD in Economics from
the University of Innsbruck (Austria) and a degree in Economics from University of Sevilla
(Spain). He has previously worked as a Postdoc Assistant Professor at Johannes Kepler
University Linz (Austria). Octavio has collaborated in projects with different institutions. His
field of research is applied econometrics and macro-econometrics. Specially, he has
worked on international macroeconomics, monetary economics, time series analysis,
and the quantitative analysis of climate change. Octavio has published in various
international scientific journals.

Page 7 of 43
LEARNING OBJECTIVES
Math and Statistics
 Revising basic mathematical and statistical concepts;
 Understanding the use of those concepts in economics.

Microeconomics
 Understanding the basics of micro-economics as a foundation to economics;
 Understanding how, given technology, a firm minimizes its costs
 Learning how profit maximizing firms act on competitive and non-competitive
markets

International trade
 Understanding the basic concepts of international trade, including how trade
flows arise and develop, trade theories, market structures, global value chains
and FDI, links to labor and capital markets, and geographical economics;
 Being able to work with the apprehended theories and link them to every-day
economic situations and developments;
 Learning how to present theories and apply them and defend opinions in public
and in class.

Econometrics
 Understanding the basics of econometrics in combination with the STATA
software.
 Understanding and utilizing the empirical approaches to the study of
international trade.

Macroeconomics
 Understanding the most important concepts and tools for analysis of
macroeconomics and international macroeconomics.
 Being able to better understand and interpret recent macroeconomic
developments in an international context.
 Gaining understanding on the implications for government policies and markets
of recent developments in international goods and financial markets.
 Gaining basic understanding on the implications for trade of the recent
macroeconomic developments.
 Addressing the economic policy options available to governments in the present
era of economic globalization with respect to international currency systems.

Page 8 of 43
RECOMMENDED LITERATURE
 Krugman, P.R., Obstfeld, M. & Melitz M. J. (2017): International Economics. Theory
and policy. 11th edition, Harlow, Essex: Pearson Education. (10th edition -2014
also works)
 Pindyck, R., Rubinfeld, D. (2018): Microeconomics. 9th edition. Pearson.
 Wooldridge, J. (2016): Introductory Econometrics: A Modern Approach. 6th
Edition. Cengage.
 Blanchard (2016): Macroeconomics. 7th Global edition, Boston: Pearson
Education.
Note: We will deliver additional readings in advance to help understand basic concepts
related to the lectures and to supplement the compulsory readings either during the
class or for the exercises proposed. The readings delivered will be considered part of the
material to prepare the exam, unless the instructor excludes them from being part of the
content of the exam.

Complementary economic references [Optional and supplementary information

for students]
Books and online handbooks
1. Copeland, L. (2008): Exchange rates and international finance. 5th edition.
Harlow, Essex: Pearson Education.
2. IMF (2009): Balance of Payments and International Position Manual. 6th edition.
3. Lequiller, F. and D. Blades (2006): Understanding National Accounts, OECD
Publishing.
4. Mishkin, F.S. (2010): Economics of money, banking and financial markets. 8th
edition. Harlow, Essex: Pearson Education.
5. Sarno, L. and M. Taylor (2002): The economics of exchange rates, Cambridge:
Cambridge University Press.
6. Van Marrewijk, C. (2007): International Economics, Oxford: Oxford University Press.

Page 9 of 43
EXAMS AND GRADES
Important: A positive evaluation of each of the five sub-modules of International
Economics I is necessary to complete the whole module with a positive grade!

Math and Statistics

 The grade will be based on an online final exam
 The grade on Math and Statistics counts for 10 % of the final course grade

Microeconomics
 The grade will be based on an online final exam
 The grade on Microeconomics counts for 20 % of the final course grade

International Trade
 The grade will be based on an online final exam
 The grade on International Trade counts for 25 % of the final course grade

Econometrics
 The grade will be based on a replication exercise as explained in class
 The grade on Econometrics counts for 20% of the final course grade

Macroeconomics
 The grade will be based on an online final exam
 The grade on Macroeconomics counts for 25 % of the final course grade

Page 10 of 43
 COURSE OVERVIEW
Lesson Date Weekday Subject Hours Time Lecturer Topic Reading
1. 09.16.20 Wed Maths and Statistics 3 09:00 - 12:00 D. Oberdabernig Elementary Algebra, Rosser, M.
Stat1 Functions, Equations, “Basic
Growth Rates, Mathematics
for
Economists”
2. 09.17.20 Thu Maths and Statistics 3 10:00 - 13:00 D. Oberdabernig Differential Calculus; Rosser, M.
Stat2 Statistics terminology, “Basic
Frequency Mathematics
distributions, for
Economists”
Triola, M.F.
“Essentials of
Statistcs”
3. 09.18.20 Fri Maths and Statistics 3 10:15 – 13:15 D. Oberdabernig Measures of Central Triola, M.F.
Stat3 Tendency and “Essentials of
Location, Measures Statistcs”
of dispersion and
dependence, Index
numbers
Exam 09.25.20 Fri Maths and Statistics 2 10:15-12:15 D. Oberdabernig Online exam
Exam
4. 09.30.20 Wed Microeconomics 3 09:00 - 12:00 D. Oberdabernig Very short revision: Pindyck and
Micro 1 Supply and Demand; Rubinfeld,
Consumer Behavior Chapters 1-3
5. 10.02.20 Fri Econometrics 2 10:15 - 12:15 D. Oberdabernig The STATA Rodriguez, G.
Eco 1 environment STATA Tutorial
6. 10.02.20 Fri Macroeconomics 2.5 14:00 - 16:30 O. Fernandez The short run (I): The BLA 3 & 4
Macro goods market; the
1 short run (II): Financial
markets.
7. 10.07.20 Wed Microeconomics 2 10:00 - 12:00 D. Oberdabernig Individual and Market Pindyck and
Mirco 2 Demand Rubinfeld,
Chapter 4
8. 10.09.20 Fri Econometrics 2 10:15 - 12:15 D. Oberdabernig Simple linear Wooldridge
Eco 2 regression model Ch1 & 2
9. 10.09.20 Fri Macroeconomics 2.5 14:00 - 16:30 O. Fernandez The short run (II): BLA 4 & 5
Macro Financial markets; the
2 short run (III): Goods
and financial
markets: The IS-LM
model.
10. 10.14.20 Wed Microeconomics 2 10:00 - 12:00 D. Oberdabernig Production Pindyck and
Micro 3 Rubinfeld,
Chapter 6
11. 10.16.20 Fri Econometrics 2 10:15 - 12:15 D. Oberdabernig Multiple linear Wooldridge
Eco 3 regression model Ch 3
12. 10.16.20 Fri Macroeconomics 2.5 14:00 - 16:30 O. Fernandez The short run (III): BLA 5 & 6
Macro3 Goods and financial
markets: The IS-LM
model; the short run
(IV): The extended IS-
LM model: financial
markets revisited.

Page 11 of 43
13. 10.21.20 Wed Microeconomics 2 10:00- 12:00 P. Tomberger Cost of Production Pindyck/
Micro 4 Rubinfeld, Ch7
14. 10.23.20 Fri Econometrics 2 10:15 - 12:15 D. Oberdabernig Statical Inference Wooldridge
Eco 4 Ch 4
15. 10.23.20 Fri Macroeconomics 2.5 14:00 - 16:30 O. Fernandez The short run (IV): The BLA 6 & 7
Macro extended IS-LM
4 model: financial
markets revisited;
the medium run (I):
The labor market.
16. 10.28.20 Wed Microeconomics 3 09:00 - 12:00 P. Tomberger Profit maximization Pindyck and
Micro 5 Rubinfeld, Ch.
8.1-8.8
17. 10.30.20 Fri Econometrics 2 10:15 - 12:15 D. Oberdabernig Non-Linearities & Wooldridge
Eco 5 Interaction Effect Ch 6
18. 10.30.20 Fri Macroeconomics 2.5 14:00 - 16:30 O. Fernandez The medium run (I): BLA 7 & 8
Macro The labor market; the
5 medium run (II): The
Phillips curve.
19. 11.04.20 Wed Microeconomics 2 10:00 - 12:00 P. Tomberger Competitive markets Pindyck and
Micro 6 Rubinfeld, Ch.
9.1-9.4 + 9.6
20. 11.06.20 Fri Econometrics 2 10:15 - 12:15 D. Oberdabernig Further topics Wooldridge
Eco 6 Ch 8, 14, 15
21. 11.06.20 Fri Macroeconomics 2.5 14:00 - 16:30 O. Fernandez The medium run (II): BLA 8 & 9
Macro The Phillips curve; the
6 medium run (III) The
IS-LM-PC model.
22. 11.11.20 Wed Microeconomics 2 10:00 - 12:00 P. Tomberger Market power and Pindyck and
Micro 7 monompolistic Rubinfeld, Ch.
competition 10.1-10.4 and
Ch. 12.1
23. 11.13.20 Fri Trade 2 10:15 - 12:15 P. Tomberger Overview and KOM, Ch. 1-3
T1 Ricardo’s model
24. 11.13.20 Fri Macroeconomics 2.5 14:00 - 16:30 O. Fernandez The open economy BLA 17 & 18
Macro (I): Openness in
7 goods and financial
markets; the open
economy (II): The
goods market.
25. 11.18.20 Wed Trade 3 09:00 - 12:00 P. Tomberger Ricardo cnt‘ and KOM, Ch. 3-4
T2 specific factors
model
26. 11.20.20 Fri Trade 2 10:15 - 12:15 P. Tomberger Heckscher-Ohlin KOM, Ch. 5
T3
27. 11.20.20 Fri Macroeconomics 2.5 14:00 - 16:30 O. Fernandez The open economy BLA 18 & 19
Macro (II): The goods
8 market; the open
economy (III): The
Mundell-Fleming
model.
Exam 11.25.20 Wed Microeconomics 3 09:00 – 12:00 D. Oberdabernig/ Online exam
Exam P. Tomberger
28. 11.27.20 Fri Trade 3 10:15 - 13:15 P. Tomberger Standard trade KOM, Ch. 6
T4 model

Page 12 of 43
29. 11.27.20 Fri Macroeconomics 2.5 14:00 - 16:30 O. Fernandez The open economy BLA 19 & 20
Macro (III): The Mundell-
9 Fleming model; the
open economy (IV):
Exchange rate
regimes.
30. 12.02.20 Wed Trade 3 09:00 -12:00 P. Tomberger External economies KOM, Ch. 7
T5 and location of
production
31. 12.04.20 Fri Trade 3 10:15 - 13:15 P. Tomberger Firms in the global KOM, Ch. 8
T6 economy
32. 12.04.20 Fri Trade 2 14:00 - 16:00 P. Tomberger Firms in the global KOM, Ch. 8 - 9
T7 economy cnt’ and
instruments of trade
policy
Exam TBC Macroeconomics O. Fernandez Online exam
Exam
Exam TBC Trade Exam P. Tomberger Online exam

Page 13 of 43
LESSONS 1.S1, 2.S2, 3.S3 SEPTEMBER 16, 17, 18
Maths and Statistics (D. Oberdabernig)

Topic:
 Revising mathematics (5 hours):
Elementary algebra: notation, arithmetic operations, evaluating expressions; Equations: re-
arranging terms, solving (linear) systems of equations; Functions: meaning and use,
prominent types, plotting; Growth rates; Differential calculus: meaning and use,
differentiation rules, elasticity.

 Revising descriptive statistics (4 hours):

Terminology and types of variables; Frequency distributions and histograms; Measures of
central tendency, location, dispersion and dependence; Index numbers.

Optional Reading Materials:

The lessons will revise the topics mentioned above. Students who have covered these concepts in
high school should be able to follow without special reading. Background readings to refresh the
material are
 Rosser, M. & Lis, P. (2016): Basic Mathematics for Economists. 3rd ed., Taylor & Francis Ltd;
 Keedy M.L. (1978), Algebra One, Addison-Wesley Publishing Company
 Triola, M.F (2011): Essentials of Statistics. 4th ed., Pearson.

Page 14 of 43
LESSON 4.MI1 SEPTEMBER 30
Microeconomics (D. Oberdabernig)

Topics:
 Very short revision of the basics of supply and demand:
(Note: Students are requested to have prepared this material before the beginning of the
MILE/TRAIL+. The revision will be short and assume that students are familiar with the topic);
The market mechanism; Elasticities and slopes; Supply and demand

 Consumer behavior:
Consumer preferences; Budget constraints; Consumer choice; Revealed Preference;
Marginal utility and consumer choice

Compulsory Reading Materials:

 Pindyck, R., Rubinfeld, D. (2018): Microeconomics. 9th edition. Pearson. Chapters 1-3

Optional Reading Materials:

 Machlup F. (1958): Equilibrium and Disequilibrium: Misplaced Concreteness and Disguised
Politics. The Economic Journal, 68(269), 1-24.

Page 15 of 43
LESSON 5.E1 OCTOBER 2
Econometrics (D. Oberdabernig)
Topics:
 The STATA Environment:
User surface and basic navigation; Dataset structures (cross-section, panel, bilateral data,
time series); Data import; Command syntax (saving commands, data manipulation, …);
Graphs

Suggested Reading Materials:

 Rodriguez, G. STATA Tutorial, available at: http://data.princeton.edu/stata/

Page 16 of 43
LESSON 6.MA1 OCTOBER 2
Macroeconomics (O. Fernández-Amador)
Topics:
 The short run (I): The goods market.
The goods market equilibrium and the determination of output; the interaction among
demand, production and income; effects of fiscal policy on output.
 The short run (II): Financial markets.
The equilibrium in financial markets and the determination of the interest rate in the short
run; effects of monetary policy on the interest rate.

Suggested Reading Materials:

 BLA, chapters 3 and 4.

Page 17 of 43
LESSON 7.MI2 OCTOBER 7
Microeconomics (D. Oberdabernig)

Topics:
 Individual and market demand:
Individual demand; Income and substitution effects; Market demand; Consumer surplus;
Network externalities

Compulsory Reading Materials:

Pindyck, R., Rubinfeld, D. (2018): Microeconomics. 9th edition. Pearson. Chapter 4

Page 18 of 43
LESSON 8.E2 OCTOBER 9
Econometrics (D. Oberdabernig)

Topics:
Simple Linear Regression Model:
Intuition; Mechanism of estimation (OLS); Output interpretation; Model quality (R2)

Compulsory Reading Material:

Wooldridge, J.M. (2015), Introductory Econometrics: A Modern Approach (6th edition), Cengage
Learning, Boston, USA. Chapters 1 and 2.

Page 19 of 43
LESSON 9.MA2 OCTOBER 9
Macroeconomics (O. Fernández-Amador)
Topics:
 The short run (II): Financial markets.
The equilibrium in financial markets and the determination of the interest rate in the short
run; effects of monetary policy on the interest rate.
 The short run (III): Goods and financial markets: The IS-LM model.
The equilibrium in the goods market: The IS relation; the equilibrium in the financial markets:
The LM relation; the IS-LM model and the effects of fiscal and monetary policy; dynamics
and the short-run description of the economy.

Suggested Reading Materials:

 BLA, chapters 4 and 5.

Page 20 of 43
LESSON 10.MI3 OCTOBER 14
Microeconomics (D. Oberdabernig)

Topics:
 Production:
Firms and their production decisions; Production with one variable input (labor); Production
with two variable inputs; Returns to scale

Compulsory Reading Materials:

 Pindyck, R., Rubinfeld, D. (2018): Microeconomics. 9th edition. Pearson. Chapter 4

Page 21 of 43
LESSON 11.E3 OCTOBER 16
Econometrics (D. Oberdabernig)
Topics:
 Multiple Linear Regression Model:
Intuition; Mechanism of estimation (OLS); Output interpretation; Model quality (R2 and
adjusted R2); Omitted variable bias; Multicollinearity

Compulsory Reading Material:

 Wooldridge, J.M. (2015), Introductory Econometrics: A Modern Approach (6th edition),
Cengage Learning, Boston, USA. Chapter 3

Page 22 of 43
LESSON 12.MA3 OCTOBER 16
Macroeconomics (O. Fernández-Amador)
Topics:
 The short run (III): Goods and financial markets: The IS-LM model.
The equilibrium in the goods market: The IS relation; the equilibrium in the financial markets:
The LM relation; the IS-LM model and the effects of fiscal and monetary policy; dynamics
and the short-run description of the economy.
 The short run (IV): The extended IS-LM model: financial markets revisited.
Nominal and real interest rates; risk and interest rates; financial intermediaries; the
extended IS-LM model; the recent financial crisis.

Suggested Reading Materials:

 BLA, chapters 5 and 6.

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LESSON 13.MI4 OCTOBER 21
Microeconomics (P. Tomberger)
Topics:
 The cost of production: Measuring cost; Cost in the short-run; Cost minimization in the long-
run; Short- vs. long-run cost curves; (Dis-)economies of scale; The learning curve.

Compulsory Reading Material:

 Pindyck and Rubinfeld, Chapter 7.1 – 7.4 and 7.6

Further Comments: The students are expected to be especially familiar with the topics discussed in
Pindyck and Rubinfeld, Chapter 7.1. Due to time constraints this section can be discussed only
briefly in the lecture.

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LESSON 14.E4 OCTOBER 23
Econometrics (D. Oberdabernig)

Topics:
 Statistical Inference:
Rationale for hypothesis testing; Mechanism of hypothesis testing

Compulsory Reading Material:

 Wooldridge, J.M. (2015), Introductory Econometrics: A Modern Approach (6th edition),
Cengage Learning, Boston, USA. Chapter 4.

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LESSON 15.MA4 OCTOBER 23
Macroeconomics (O. Fernández-Amador)
Topics:
 The short run (IV): The extended IS-LM model: financial markets revisited.
Nominal and real interest rates; risk and interest rates; financial intermediaries; the
extended IS-LM model; the recent financial crisis.
 The medium run (I): The labor market.
Equilibrium in the labor market; wage and price determination; the natural rate of
unemployment.

Suggested Reading Materials:

 BLA, chapters 6 and 7.

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LESSON 16.MI5 OCTOBER 28
Microeconomics (P. Tomberger)
Topics:
 Profit maximization and competitive supply: The concepts of perfectly competitive markets
and profit maximization; Marginal revenue, marginal cost, and profit maximization; Short-
and long-run supply curves for firms and the market; Producer surplus; Output in the long-
run; Effects of a tax on output.

Compulsory Reading Material:

 Pindyck and Rubinfeld, Chapter 8.1 – 8.8

Further Comments: The students are expected to be especially familiar with the topics discussed in
Pindyck and Rubinfeld, Chapter 8.1 and 8.2. Due to time constraints this section can be discussed
only briefly in the lecture.

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LESSON 17.E5 OCTOBER 30
Econometrics (D. Oberdabernig)

Topics:
 Non-Linearities & Interaction Effects
Functional form; Scaling and beta coefficients; Dummy variables; Interaction effects: One
and two regressors

Compulsory Reading Material:

 Wooldridge, J.M. (2015), Introductory Econometrics: A Modern Approach (6th edition),
Cengage Learning, Boston, USA. Chapter 6.

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LESSON 18.MA5 OCTOBER 30
Macroeconomics (O. Fernández-Amador)
Topics:
 The medium run (I): The labor market.
Equilibrium in the labor market; wage and price determination; the natural rate of
unemployment.
 The medium run (II): The Phillips curve.
The relationship between inflation, expected inflation, and unemployment; the Phillips
curve and the natural rate of unemployment; the relation between unemployment and
inflation cross-country and over time.

Suggested Reading Materials:

 BLA, chapters 7 and 8.

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LESSON 19.MI6 NOVEMBER 11
Microeconomics (P. Tomberger)
Topics:
 The analysis of competitive markets: Gains and losses from government policies; Efficiency
of competitive markets; Minimum prices; Price supports and production quotas.

Compulsory Reading Materials:

 Pindyck and Rubinfeld, Chapter 9.1 – 9.4 and 9.6

Page 30 of 43
LESSON 20.E6 NOVEMBER 6
Econometrics (D. Oberdabernig)

Topics:
 Recap and short introduction to further concepts:
(Note: depending on time, one or more of the following topics may be discussed)
Heteroscedasticity; Fixed effects; Endogeneity

Reading Material:
 Wooldridge, J.M. (2015), Introductory Econometrics: A Modern Approach (6th edition),
Cengage Learning, Boston, USA. Heteroscedasticity: Chapter 8; Fixed effects: Chapter
14; Endogeneity: Chapter 15

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LESSON 21.MA6 NOVEMBER 6
Macroeconomics (O. Fernández-Amador)
Topics:
 The medium run (II): The Phillips curve.
The relationship between inflation, expected inflation, and unemployment; the Phillips
curve and the natural rate of unemployment; the relation between unemployment and
inflation cross-country and over time.
 The medium run (III): The IS-LM-PC model.
The IS-LM-PC model; the dynamics of adjustment of output and inflation; two examples: The
dynamic effects of fiscal consolidation and of oil price shocks.

Suggested Reading Materials:

 BLA, chapters 8 and 9.

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LESSON 22.MI7 NOVEMBER 11
Microeconomics (P. Tomberger)
Topics:
 Part I: Market power: The monopoly and monopoly power; Sources of monopoly power;
The social costs of monopoly power.
 Part II: Monopolistic competition

Compulsory Reading Materials:

 Pindyck and Rubinfeld, Chapter 10.1 – 10.4
 Pindyck and Rubinfeld, Chapter 12.1

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LESSON 23.T1 NOVEMBER 13
International Trade (P. Tomberger)
Topics:
 Part I: Overview over the lecture content
 Part II: The Ricardian model: The concept of comparative advantage; Comparative
advantage and the pattern of trade (one-factor economy); Gains from trade;
Misconceptions about comparative advantage.

Compulsory Reading Materials:

 Krugman et al. (2018): Ch. 1 – 2 and Ch. 3 (until “Misconceptions about Comparative
Advantage”)

Further Comments: The students are expected to be especially familiar with the topics discussed in
Krugman et al. (2018), chapters 1 and 2. Due to time constraints these chapters cannot or only
briefly be discussed in the lecture.

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LESSON 24.MA7 NOVEMBER 13
Macroeconomics (O. Fernández-Amador)
Topics:
 The open economy (I): Openness in goods and financial markets.
Implications of openness in goods and financial markets; the nominal exchange rate; the
real exchange rate; the balance of payments of a country; the interest rate parity
condition.
 The open economy (II): The goods market.
The equilibrium in the goods market for an open economy and the trade balance; effects
of domestic and foreign shocks; the effects of a real depreciation; the connection among
savings, investment and the trade balance.

Suggested Reading Materials:

 BLA, chapters 17 and 18.

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LESSON 25.T2 NOVEMBER 18
International Trade (P. Tomberger)
Topics:
 Part I: The Ricardian model 2: Comparative advantage with many goods; Empirical
evidence on the Ricardian model.
 Part II: Specific factors and income distribution; The specific factors model; International
trade in the specific factors model; Income distribution and gains from trade; The political
economy of trade: a preliminary view.

Compulsory Reading Materials:

 Krugman et al. (2018): Ch. 3
 Krugman et al. (2018): Ch. 4 (excluding “International Labor Mobility”)

Page 36 of 43
LESSON 26.T3 NOVEMBER 20
Internatonal Trade (P. Tomberger)
Topics:
 Resources and trade - The Heckscher-Ohlin model: Modelling a two-factor economy;
Effects of international trade between two-factor economies; Empirical Evidence on the
Heckscher-Ohlin model.

Compulsory Reading Materials:

 Krugman et al. (2018): Ch. 5

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LESSON 27.MA8 NOVEMBER 20
Macroeconomics (O. Fernández-Amador)
Topics:
 The open economy (II): The goods market.
The equilibrium in the goods market for an open economy and the trade balance; effects
of domestic and foreign shocks; the effects of a real depreciation; the connection among
savings, investment and the trade balance.
 The open economy (III): The Mundell-Fleming model.
Equilibrium in the goods and financial markets when including the foreign exchange
market; the determination of output, interest rate and exchange rates; policy under flexible
and fixed exchange rates.

Suggested Reading Materials:

 BLA, chapters 18 and 19.

Page 38 of 43
LESSON 28.T4 NOVEMBER 27
International Trade (P. Tomberger)
Topics:
 Part I: The Standard trade model: A Standard model of a trading economy; Tariffs and
export subsidies.
 Part II: Trade theory applied to policy analysis 1.

Compulsory Reading Materials:

 Krugman et al. (2018): Ch. 6 (except “International Borrowing and Lending”)
 Gelhar, M. (1996): “Historical analysis of growth and trade patterns in the Pacific Rim: An
evaluation of the GTAP framework”, in: Hertel, T. (ed.): “Global Trade Analysis”, Princeton
University Press. Purdue University, Indiana. 1997.

Page 39 of 43
LESSON 29.MA9 NOVEMBER 27
Macroeconomics (O. Fernández-Amador)
Topics:
 The open economy (III): The Mundell-Fleming model.
Equilibrium in the goods and financial markets when including the foreign exchange
market; the determination of output, interest rate and exchange rates; policy under flexible
and fixed exchange rates.
 The open economy (IV): Exchange rate regimes.
Properties of different exchange rate regimes; the fixed and the flexible exchange-rate
regimes revisited; a comparison of exchange rate regimes.

Suggested Reading Materials:

 BLA, chapters 19 and 20.

Page 40 of 43
LESSON 30.T5 DECEMBER 2
International Trade (P. Tomberger)
Topics:
 Part I: External economies of scale and the international location of production: Economies
of scale and market structure; The theory of external economies; Specialized suppliers;
Labor market pooling; Knowledge spillovers; Interregional trade and economic geography.
 Part II: Firms in the global economy 1: The theory of imperfect competition; Monopolistic
competition and trade.

Compulsory Reading Materials:

 Krugman et al. (2018): Ch. 7
 Krugman et al. (2018): Ch. 8

Page 41 of 43
LESSON 31.T6 DECEMBER 4
International Trade (P. Tomberger)
Topics:
 Firms in the Global economy 2: The theory of imperfect competition; Monopolistic
competition and trade; Firm responses to trade: winners, losers, and industry performance;
Trade costs and export decisions; Dumping; Multinational and outsourcing; Foreign direct
investment.

Compulsory Reading Materials:

 Krugman et al. (2018): Ch. 8 (until “Trade Costs and Export Decisions”)

Page 42 of 43
LESSON 32.T7 DECEMBER 4
International Trade (P. Tomberger)
Topics:
 Part I: The instruments of trade policy: Basic tariff analysis; Costs and benefits of a tariff;
Other instruments of trade policy.
 Part II: Trade theory applied to policy analysis 2
 Part III: Conclusions: Setting the theories discussed in class into perspective

Reading Materials:
 Krugman et al. (2018): Ch. 9
 Krugman, P. (2009): “The Increasing Returns Revolution in Trade and Geography”, The
American Economic Review, 99. 561—571.
 Francois, J., van Meijl, H. and F. van Tongeren (2005): “Trade liberalization in the Doha
Development Round, Economic Policy, April 2005. 349 – 391.

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