ECONOMICS 40223International Monetary EconomicsFall 2018

Dr. John T. HarveyFourth Floor Scharbauer Hall(817)257-7230 (office), (817)223-4497 (cell)(If you are going to call my cell, text first so I know it’s you and I’llanswer!)

j.harvey@tcu.edu

COURSE DESCRIPTION: Economics 40223will describe for the student the state of economictheory in explaining exchange rate movements. Unlike similar portions of an international financecourse, the focus will not be upon individualportfolio decisions and the like, but instead onbroader theoretical and policy questions. Thiscourse carries Global Awareness credit.

PREREQUISITES: Intermediate Macro (C orbetter).

USE OF ELECTRONIC DEVICES: Not onlyshould they be stowed during takeoff and landing,they simply aren’t needed in this class! You willnever need a calculator for my exams, so please donot bring one. Also, students wishing to have atranslator available must have only a paperdictionary (please let me check it before the exam). Sorry, I had an incident in the past that has forcedme to adopt this policy!

PICTURE DAY: By golly gosh, you are paying alot of money to come to TCU (well, someoneis)–you deserve to have your professors know yourname! So, on the second or third day of class I’ll betaking all your pictures (to which you’ll add yournames later) so that I can study, study, study. Byexam one I should know everyone’s name ANDwhich face it goes with!

REMINDER: Economics majors must earn a C orbetter in order to count economics courses towardtheir economics degree (though as a “D” it can bean elective).

REQUIREMENTS: There will be three majorexams. The points will be allocated as follows:

Exam One 30Exam Two 30Final Exam +40

100

The final is cumulative (though not over ALL thematerial we covered on exams one and two).Grades will be assigned on the following basis(parenthetical references are to the TCUUndergraduate Studies Bulletin definition ofthe performance necessary for the assignment ofeach grade):

100 to 89.5 points A (Exceptional) 89 to 79.5 points B (Superior) 79 to 69.5 points C (Medium) 69 to 59.5 points D (Inferior) 59.4 and less F (Failure)

Exams are essay and will test students’ knowledgeof the material covered in lecture and the reading,require them to construct coherent analyses ofevents or trends using the appropriate framework,and use evidence appropriately when asked toanalyze novel situations.

ABSENCES, SELF MOTIVATION, AND YOU: • From the first day of class, students have a list

of potential exam questions covering 80% ofwhat I can ask.

• They are free to work out the answers at homeand they are encouraged to send these to me soI can check them.

• I will go over and over these with the studentuntil we are sure that their set is absolutelyperfect.

• Happily, everyone passes my course!

One of the above statements is false. Sadly, it is thelast one! In fact, the average grades in my upper-level courses are consistently among the lowest (ifnot the lowest) in the department. The reasons aresimple: many students 1) never bother to do thestudy questions and 2) don’t come to class. Do notmake these mistakes! Trust me when I say that youwill never understand the material properly if youaren’t present for the lectures and you can’t learnthe material without sitting down and doing thehard work of answering the study questionsyourself. Getting the answers from someone else isnot useless, but it’s pretty close. Believe mewhen I tell you this because I have seen itover and over and over! This class is anightmare for those who have no self discipline.On the other hand, for those who are willing tocome to class and work hard, it’s difficult not toearn at least a B. Incidentally, among the worstoffenders are those repeating the course. I assumethey are of the attitude that they don’t need tocome to class because they’ve already taken thecourse once. No, they haven’t. Again, please don’tmake this mistake!

Before I leave this topic, I want to assure theresponsible students in class that I do not make anyside deals with those who never show up.Irresponsibility does not qualify them for specialtreatment. Attendance is not “required” in theclass, but then neither is passing.

GRADING ON IMPROVEMENT: I have alwaysthought it fair to raise a student’s grade when sheshowed significant improvement over the course ofthe semester. However, I am very uncomfortablewith arbitrarily determining the bonus. Oh happyday! I have come up with a formula to use in thisregard! Get out your calculator...

First off, because it is cumulative and will reflectyour knowledge of all the course material,improvement is linked to your final exam score. To determine your improvement bonus first convertall your scores into percentages (e.g., 90% insteadof 27/30). Then subtract your lower of your firsttwo exam scores from your final exam percentageand divide that total by 10. That is your bonus,and it will be added to your course total. Note thattheoretically the bonus can vary from 10percentage points (with a 100% on the final and a0% on either exam one or exam two) to 0 (with afinal exam score that does not exceed your lowestscore). There is no risk to this bonus–at worst, Iadd a zero to your course grade.

FINAL EXAM: Our final is scheduled forTuesday, December 11 from 8:00am to10:30am. Only those students with more thantwo final exams in a twenty-four hour period arepermitted to reschedule any finals. According toUniversity policy, the student must prove that thisexceptions applies and this must be done prior tothe last week of regular class sessions before finalexaminations.

PROCEDURES FOR STUDENTS WITHDISABILITIES: Texas Christian Universitycomplies with the Americans With Disabilities Actand with Section 504 of the Rehabilitation Act of1973 regarding students with disabilities. Nootherwise qualified individual shall be denied accessto or participation in the services, programs andactivities of TCU solely on the basis of a disability.The University shall provide reasonableaccommodations for each eligible student who (a)has a physical or mental impairment thatsubstantially limits a major life activity, (b) has arecord or history of such an impairment, or (c) isregarded as having such an impairment.

Each eligible studentis responsible forpresenting relevant,v e r i f i a b l e ,p r o f e s s i o n a ld o c u m e n t a t i o nand/or assessmentreports to theCoordinator forS t u d e n t s w i t hD i s a b i l i t i e s .I n f o r m a t i o nc o n c e r n i n g astudent’s disabilityis treated in aconfidential mannerin accordance withUniversity policies as well as applicable federal andstate laws. Documentation presented to theCoordinator shall be reviewed by appropriateUniversity professional(s) to verify the existence ofa disability. Further documentation may berequired from the student to substantiate the claimof a disability or to assist the University indetermining appropriate accommodations.

Eligible students seeking accommodations shouldcontact the Coordinator as soon as possible in theacademic term for which they are seekingaccommodations. The Coordinator shall prepareletters to appropriate faculty members concerning

specific, reasonable academic adjustments for thestudents. The student is responsible for deliveringaccommodations letters, conferring with facultymembers, and returning validation of the receipt ofinformation to the Coordinator. The Coordinatorshall consult with the student and with Universityfaculty and staff to ensure delivery of appropriatesupport services and shall serve as liaison betweenthe student and the faculty member as needed.

Students who wish to appeal a decision regardingappropriate accommodations shall do so in writingto the Affirmative Action Officer, who shall decidethe appeal. The Affirmative Action Officer’sdecision may be appealed within 7 calendar days in

writing to theProvost, whosedecision may beappealed in writingwithin 7 calendardays directed to theChancellor. At anystep during such anappeal, the persondeciding the appealmay confidentiallyc o n s u l t w i t ha p p r o p r i a t eprofessionals/advisors with in oro u t s i d e t h eUniversity.

The Coordinator for Students with Disabilities maybe contacted at the Center for Academic Services,Texas Christian University, TCU Box 297710,Fort Worth, Texas 76129, (817) 257-7486.

ACADEMIC HONESTY: I do my utmost to seeto it that those who are studying hard in my courseget full credit for their work and that they are notcheated by classmates. I do this primarily byremoving temptation and closely monitoring allexams. However, in the event that my vigilance isnot sufficient and a case of academic dishonestydoes come to my attention, I give my word to thehonest members of the class that the offendingparty will be penalized as outlined by Universitypolicy. Speaking of the latter, here is the officialTCU statement:

Academic Misconduct (Sec. 3.4 from the StudentHandbook) – Any act that violates the academic integrityof the institution is considered academic misconduct. Theprocedures used to resolve suspected acts of academicmisconduct are available in the offices of Academic Deansand the Office of Campus Life. Specific examples include,but are not limited to:

• Cheating: Copying from another student’s testpaper, laboratory report, other report, orcomputer files and listings; Using, during anyacademic exercise, material and/or devices notauthorized by the person in charge of the test;Collaborating with or seeking aid from anotherstudent during a test or laboratory withoutpermission; Knowingly using, buying, selling,stealing, transporting, or soliciting in itsentirety or in part, the contents of a test orother assignment unauthorized for release;Substituting for another student or permittinganother student to substitute for oneself;

• Plagiarism: The appropriation, theft, purchaseor obtaining by any means another’s work, andthe unacknowledged submission or incorporationof that work as one’s own offered for credit.Appropriation includes the quoting orparaphrasing of another’s work without givingcredit therefore.

• Collusion: The unauthorized collaboration withanother in preparing work offered for credit.

Students are not the only ones who should be heldto a moral standard in the process of determining

course grades. It is equally vital to the integrity ofthe course that the instructor maintain the highestlevel of honesty. I promise everyone that, first, nostudent will have a grade changed simply becausethey made inquiries regarding my evaluation. Norwill someone in our class receive a higher grade onthe basis of “need” (to keep a scholarship, to stay inschool, to receive Economics credit, to not bekilled by parents, etc.). If those are to be criteriafor the determination of grades, then they shouldappear in the syllabus as assignments. Furthermore, the exams will be graded blindly(i.e., no names) and, at the end of the semester,the one and only place I will look to calculatestudents' grades will be their cumulativeperformance on the tests. The standard I will applyin determining letter grades absolutely will be theone listed above, and I promise that it will bethe same for everyone. Finally, I feel verystrongly that it is each student's right to understandhow their grade was determined, and I am alwayshappy to fully explain any questions you may have.

MAKEUP EXAMS: This class will meet on thelast regularly scheduled day of class (Tuesday,December 4) at the regular class time to take anymakeups necessary. The student need notcontact the instructor with an excuse totake a makeup. Simply miss the regular examday and you are entitled to take the makeup. Onlyone exam may be missed in this manner, however. Before any other such incidents I must be contactedbefore the time of the exam. There is noguarantee that the excuse will be honored (I willconsider the circumstances and may consult thedepartment chair, dean, and/or Campus Life). Inaddition, if you already know or could have knownthat you will be absent for exam two, then thisalready counts as your one missed test. You wouldneed a documented excuse for not showing up forexam one.

INSTRUCTOR QUALIFICATIONS:• B.A. Economics and Political Science, U. of

Tennessee 1983.• M.A. Economics, U. of Tennessee 1986.• Ph.D. Economics ( in terna t iona l ,

macroeconomics, history of economics), U. ofTennessee 1987.

Relevant Publications:• “Modeling Financial Crises: A Schematic

Approach,” Journal of Post KeynesianEconomics, vol. 33, no.1, 2010.

• “Neoliberalism, Neoclassicism and EconomicWelfare,” Journal of Economic Issues,vol.44, no.2, 2010.

• “Currency Market Participants' Mental Modeland the Collapse of the Dollar: 2001-2008,”Journal of Economic Issues, vol.43, no. 4,December 2009.

• Currencies, Capital Flows, and Crises: APost Keynesian Analysis of ExchangeRate Determination, Routledge (2009).

• “Teaching Post Keynesian Exchange RateTheory,” Journal of Post KeynesianEconomics, vol.30, no.2, Winter 2007-8.

• “Modeling Interest Rate Parity: A SystemDynamics Approach,” Journal of EconomicIssues, vol.40, no.2, June 2006.

• “Psychological and Institutional Forces and theDetermination of Exchange Rates,” Journalof Economic Issues, vol.40, no.1, March2006.

• "Capital Flows and Trade in Mexico: A Modelof Institutional Dynamics.” InternationalJournal of Development Issues, vol.3,no.1, June 2004.

• “Deviations from Uncovered Interest RateParity: A Post Keynesian Explanation.” Journal of Post Keynesian Economics,vol.27, no.1, Fall 2004.

• “The Determinants of Currency MarketForecasts: An Empirical Study.” Journal ofPost Keynesian Economics. (Fall 2002).

• “Underdevelopment in Jamaica: AnInstitutionalist Perspective.” Journal ofEconomic Issues, vol.34, no.2 (June 2000),

co-authored with Dawn Elliott.• Foundations of International

Economics: A Post Keynesian Analysis,edited by Johan Deprez and John T. Harvey,London: Routledge (1999).

• “The Nature of Expectations in the ForeignExchange Market: A Test of CompetingTheories.” Journal of Post KeynesianEconomics, vol.21, no.2 (Winter 1998-99).

• “Speculation and the Foreign Exchange Marketin the 1980's," Journal of EconomicIssues, vol.32, no.2 (June 1998), coauthoredwith Stephen Quinn.

• "Expectations and Rational Expectations in theForeign Exchange Market." Journal ofEconomic Issues, coauthored with StephenQuinn, vol. 31, no.2 (June 1997).

• "Orthodox Approaches to Exchange RateDetermination: A Survey." Journal of PostKeynesian Economics, vol.18, no.4(Summer 1996).

TCU’S DISCRIMINATION POLICYTCU prohibits discrimination and harassment basedon age, race, color, religion, sex, sexualorientation, gender, gender identity, genderexpression, national origin, ethnic origin,disability, predisposing genetic information,covered veteran status, and any other basisprotected by law, except as permitted by law.TCU also prohibits unlawful sexual andgender-based harassment and violence, sexualassault, incest, statutory rape, sexual exploitation,intimate partner violence, bullying, stalking, andretaliation. We understand that discrimination,harassment, and sexual violence can underminestudents’ academic success and we encouragestudents who have experienced any of these issuesto talk to someone about their experience, so theycan get the support they need. Review TCU’sPolicy on Prohibited Discrimination, Harassmentand Related Conduct or to file a complaint:https://titleix.tcu.edu/title-ix/.

TITLE IX AT TCUAs an instructor, one of my responsibilities is tohelp create a safe learning environment on ourcampus. It is my goal that you feel able to shareinformation related to your life experiences inclassroom discussions, in your written work, and inour one-on-one meetings. I will seek to keep anyinformation your share private to the greatestextent possible. However, I have a mandatoryreporting responsibility under TCU policy andfederal law and I am required to share anyinformation I receive regarding sexual harassment,discrimination, and related conduct with TCU’sTitle IX Coordinator. Students can receiveconfidential support and academic advocacy bycontacting TCU’s Confidential Advocate in theCampus Advocacy, Resources & Education office at(817) 257-5225 or the Counseling & MentalHealth Center at https://counseling.tcu.edu/or by calling (817) 257-7863. Alleged violationscan be reported to the Title IX Office athttps://titleix.tcu.edu/ or by calling (817)257-8228. Should you wish to make a confidentialreport, the Title IX Office will seek to maintain

your privacy to the greatest extent possible, butcannot guarantee confidentiality. Reports to lawenforcement can be made to the Fort Worth PoliceDepartment at 911 for an emergency and (817)335-4222 for non-emergency or TCU Police at(817) 257-7777.

Note that those who are found by the university tobe guilty of violence or harassment face sanctionsup to and including expulsion (if a student) andtermination (if an employee). Criminal chargesmay also apply.

CLASSROOM ETIQUETTE: In my experience,most students already know exactly how toconduct themselves in a college classroom. Unfortunately, however, a steady deterioration inthe level of civility and manners is a trend atuniversities across the nation (including here atTCU). For that reason, I have taken the reluctantstep of requiring all students to sign an agreementregarding appropriate classroom behavior. Pleaseread it carefully as I will be taking it very seriously. Despite mentioning this every semester, I’m afraidthat there are still people who don’t understandhow terribly distracting their conversations are tothe rest of us. PLEASE don’t create an incident. Instructors are, by the way, empowered to havedisruptive students dropped from the class. I willalso be signing one for you, of which you willreceive a copy. Remember–everyone pays thesame tuition and has the right to be able toconcentrate on the lecture. Please let me know ifanyone is distracting you.

https://www.boundless.com/economics/textbooks/boundless-economics-textbook/open-economy-macroeconomics-32/exchange-rates-130/exchange-rate-systems-518-12614/

ASSIGNMENTS: The text for this class isCurrencies, Capital Flows and Crises: A Post KeynesianAnalysis of Exchange Rate Determination by someguy named John T. Harvey. It is available inpaperback and you should be able to find it at thebook store. There is only one edition. Otherreadings are available here (go to the link for thisclass):http://personal.tcu.edu/jharvey/JTHCourses.html

COMING TO EXAMS LATE: Something thathas just started happening recently is peoplecoming to exams late so they can have moretime. That is your choice, but bear in mind: 1) ifsomeone has already finished the test and left,you will not be able to take the test (you musttake it as a makeup, unless you already need totake a makeup in which case you earn a zero); 2)I will not be able to review anything I havealready shared with the class up to that point; and3) your exam still ends at the same time.

WEEK

#1 End Aug 23

#2 End Aug 30

#3 End Sept 6

#4 End Sep 13

#5 End Sep 20

#6 End Sep 27

#7 End Oct 4

#8 End Oct 11

#9 End Oct 23

#10 End Oct 30

#11 End Nov 6

#12 End Nov 13

#13 End Nov 20

#14 End Nov 27

#14.5 End Dec 4

TOPIC

Introduction to course (grading, assignments, philosophy, etc.)

Terminology

Balance of Payments

POST KEYNESIAN EXCHANGE RATE DETERMINATIONBackground

*****EXAM ONE***** (Sep 20)

Trade (Im)Balances

" " "

Models: Open Economy Z-D

Models: The Mental Model

*****EXAM TWO***** (Oct 30)

Applying the Model to History

The Dollar Since 1970

" " "

Policy

*****Makeup Exams*****

*****Study Days*****

*****FINAL EXAM***** (see above)