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September 12, 2005 Course on International Financial System Professor Martin Gilman, HSE Bibliography The emphasis of the course is on the actual operation of the global economy and financial system in the context of their evolving practical, political and institutional influences, rather than on the theoretical underpinnings. Nevertheless, students must have a basic understanding of open economy macroeconomic theory. Students should be familiar with the material in the Krugman-Obtsfeld or Burda-Wyplosz and Eichengreen books. Students are strongly encouraged to explore the websites listed below and the rapidly expanding sites dealing with globalization. · Burda, M. and Wyplosz, C., Macroeconomics, A European Text (Third edition), especially Parts VI and VII. · Krugman, P. and Obstfeld, M. International Economics: Theory and Policy (latest edition). especially parts III and IV. · Eichengreen, Barry (2002). Financial Crises. Oxford: Oxford University Press, especially chapters 4 and 5, and the appendix.. Let me also recommend very strongly The Economist, the best single source of international financial news and commentary; and the on-line version of the Financial Times, parts of which are available for free to registered users. Students should carefully explore the International Monetary Fund's website http://www.imf.org/external/index.htm which covers a wide range of information and publications. Of special interest is the WEO (World Economic Outlook) which is published twice a year. The latest available is from April 2005, but an updated version, reflecting the latest developments, will be posted in early October 2005. For most countries, the IMF now publishes its annual economic reviews or abstracts thereof (Article IV reviews). All of the recent research by IMF economists is published on the website in the working paper series. These cover almost all aspects of the issues covered in this course. The annual report of the BIS is definitely worth a read on prospects for the global macroeconomy. Bank of International Settlements : BIS Annual Report, http://www.bis.org/ A quarterly report is also issued – the latest on 5 September. For World Development Reports and the World Debt Tables, go to the World Bank's website: http://www.worldbank.org There are also a considerable number of research papers on development issues posted on the website. National Central Banks: All national central banks maintain useful websites. In particular, you should look at major monetary policy speeches by prominent central bankers as well as the most important regular economic publications of leading central bank (Federal Reserve Bank, European Central Bank, Bank of Japan, Bank of England, German Bundesbank, Swiss National Bank etc.). Of particular interest in terms of macroeconomic data, consult the FRED database maintained by the Federal Reserve Bank of St.Louis. In addition to the official websites listed above, you should visit the following private or personal web sites. They offer a wide range of excellent material. www.levy.org This website maintained by the Levy Institute at Bard College in New York publishes innovative macroeconomic analysis by leading neo-Keynesian economists. www.iie.com is the website of the Institute for International Economics, which is based in Washington, DC and headed by Fred Bergsten. It has an impressive list of research into current policy issues. www.pimco.com is the website of the one of the world’s major bond-traders and contains unusually good analysis of current issues, especially in emerging market economies. Reading list: I. Globalization trends

A good, up-to-date place to start would be: Peter Isard, Globalization and the International Financial System (Cambridge University Press, 2005).

Maurice Obstfeld and Kenneth Rogoff, Foundations of International Macroeconomics (MIT Press, 1996). Chapters 5-8

· Luttwalk, Edward (2000), Turbo Capitalism. Winners and Losers in the Global Economy. New York: HarperCollins (anti-establishment but thoughtful account of evolution towards winner take all turbo capitalism with its inevitable societal upheavals and economic inequities).

Stiglitz, Joseph (2002), Globalization and its Discontents, New York: W.W. Norton.

Paul Krugman and Maurice. Obstfeld, International Economics: Theory and Practice (Addison Wesley, 6^th edition, 2003).

Martin Wolf, Why Globalization Works (2004)

World Economic Outlook (IMF, April 2005). Chapter III

Stanley Fischer, “Globalization and its Challenges,” American Economic Review 93 (May 2003), 1-30.

II. Real and financial flows · DeLong, J. Bradford (2004) “Should We Still Support Untrammeled International Capital Mobility? Or are Capital Controls Less Evil than We Once Believed?” The Economists’ Voice 1(1): 1-7. http://www.bepress.com/ev · Kaminsky, Graciela and Sergio L. Schmukler (2002) “Short-Run Pain, Long-Run Gain: The Effects of Financial Liberalization”, George Washington University. http://home.gwu.edu/~graciela · Prasad, Eswar S., Kenneth Rogoff, Shang-Jin Wei, and M. Ayhan Kose, 2003, “Effects of Financial Globalization on Developing Countries: Some Empirical Evidence,” Occasional Paper 220, International Monetary Fund, October. (see IMF website for this and other research papers). · Cohen, Benjamin (1998). The Geography of Money. Ithaca: Cornell University Press (chap. 5-6).

Rogoff, Kenneth, "Dornbusch's Overshooting Model after 25 Years," IMF Staff Papers 49 (Special Issue 2002): 1-34. http://www.imf.org/external/pubs/ft/wp/2002/wp0239.pdf

Bowman, David, and Brian M. Doyle, "New Keynesian, Open-Economy Models and Their Implications for Monetary Policy," International Finance Discussion Papers 762, Board of Governors of the Federal Reserve System, March 2003. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=392402

Lane, Philip, "The New Open Economy Macroeconomics: A Survey," Journal of International Economics 54 (August 2001): 235-66.

Obstfeld, Maurice, "International Macroeconomics: Beyond the Mundell-Fleming Model," IMF Staff Papers 47 (Special Issue 2001): 1-39. (available online)

Calvo, Guillermo A., and Carmen M. Reinhart, "Fear of Floating," Quarterly Journal of Economics 117 (May 2002): 379-408.

Obstfeld, Maurice, Jay C. Shambaugh, and Alan M. Taylor, "Monetary Sovereignty, Exchange Rates, and Capital Controls: The Trilemma in the Interwar Period," IMF Staff Papers 51 (Special Issue 2004): 75-108. http://www.imf.org/External/Pubs/FT/staffp/2003/00-00/ost.pdf

III. Vulnerabilities· Charles P. Kindleberger, Manias, Panics and Crashes: A History of Financial Crises, New York: John Wiley, 1996. · Frankel Jeffrey, " No Single Currency Regime Is Right For All Countries Or At All · Times", NBER Working Paper 7338, September 1999. · http://www.nber.org/papers/w7338 · Kaminsky, Graciela and Carmen Reinhart (1998) "On Crises, Contagion, and Confusion", November 1998. http://www.puaf.umd.edu/papers/reinhart.htm · Berg, Andrew and Eduardo Borensztein (2000) “The Pros and Cons of Full Dollarization”, International Monetary Fund Policy Working Paper: WP/00/50 March 2000; 29 (available online) · Calvo, Guillermo and Carmen Reinhart (1999) “Capital Flow Reversals, the Exchange Rate Debate, and Dollarization”, Finance and Development 36(3): 13-15. http://www.imf.org/external/pubs/ft/fandd/1999/09/calvo.htm · Frieden, Jeffry A. (2001). "The Political Economy of Dollarization: Domestic and International Factors." Harvard University, http://www.people.fas.harvard.edu/~jfrieden/ · Calvo, Guillermo and Carlos Végh, “Inflation Stabilization and BOP Crises in Developing Countries” NBER Working Paper No. 6925, February 1999. Also in: J. Taylor and M. Woodford (eds,), Handbook of Macroeconomics, Vol 1C, North-Holland, 1999.] http://www.nber.org/papers/w6925 · Pesenti, Paolo and Cédric Tille, “The Economics of Currency Crises and Contagion: An Introduction”, FRBNY Economic Policy Review 6(3), September 2000, p. 3-16. http://www.newyorkfed.org/research/epr/00v06n3/0009pese.pdf · Calvo, Guillermo, “Contagion in Emerging Markets: When Wall Street is a Carrier”, unpublished, May 1999. http://www.bsos.umd.edu/econ/ciecrp8.pdf

Rogoff, Kenneth, "Perspectives on Exchange Rate Volatility," in International Capital Flows, edited by Martin Feldstein (University of Chicago Press and the NBER), 1999, 441-53. http://www.economics.harvard.edu/~krogoff/exchange.pdf.

Kenneth Rogoff, Aasim Husain, Ashoka Mody, Robin Brooks, and Nienke Oomes, “The Evolution and Performance of Exchange Rate Regimes,” IMF Working Paper WP/03/243, December 2003 (83 pages). Downloadable from http://www.imf.org/external/pubs/cat/longres.cfm?sk=17043.0

Eichengreen, Barry, and Ricardo Hausmann, "Exchange Rates and Financial Fragility," in New Challenges for Monetary Policy (Federal Reserve Bank of Kansas City Symposium Proceedings, 1999). http://www.kc.frb.org/publicat/sympos/1999/S99eich.pdf

Kenneth Rogoff, "A Vote Against Grandiose Schemes," Finance and Development 40(1), March 2003 (4 pages). http://www.imf.org/external/pubs/ft/fandd/2003/03/rogo.htm

IV. System management · Eichengreen, Barry (1996) “Hegemonic Stability Theory and Economic Analysis: Reflections on Financial Instability and the Need for an International Lender of Last Resort”, Center for International and Development Economics Research (CIDER) Working Paper: C96/080 October 1996 Dupont , Cédric and Carsten Hefeker (2002). "Policy Trade-Offs and the Choice of International Institutions: The Gold Standard and Beyond." Paper presented at a Conference on "The Political Economy of Globalization: Can the Past Inform the Present?", Trinity College, Dublin, Aug 29-31, http://www.tcd.ie/iiis/duponthefeker.pdf · Jeffrey Sachs, "Institutions Matter But Not For Everything," Finance and Development, June 2003, 38-41.

Externalities to Human Capital: Robert E. Lucas, 1988, “Why Doesn’t Capital Flow from Rich to Poor Countries,” American Economic Review, May 1990, pp. 92-96.
Ricardo Cabellero, “The Future of the IMF,” American Economic Review 93 (May 2003), 31-38.
Abhjit V. Banerjee and Rumin He, “The World Bank of the Future,” American Economic Review 93 (May 2003), 39-44.
Stanley Fischer, Jeffery Sachs and Nicholas Stern, “The Future of the IMF and World Bank: Panel Discussion,” American Economic Review 93 (May 2003), 45-50.
Canzoneri, Matthew B., Robert E. Cumby, and Behzad T. Diba, "The Need for International Policy Coordination: What's Old, What's New, What's Yet to Come?" manuscript, Georgetown University, December 2001. http://www.georgetown.edu/faculty/cumbyr/papers/policycoordination.pdf