The International Economic System [3HEFEK150V]

Time and Place 

Lecture (Prof. Dr. Carsten Hefeker)

 Tuesday, 14-16 (US-D 109) and Wednesday, 10-12 (US-A 234)

Seminar (Prof. Dr. Carsten Hefeker)

 Friday and Saturday, July 12./13., 8-18 (US-A 234)

Tutorial on Academic Writing (Alexander Bareis) 

 Tuesday, April 23, 16-18 (US-D 109)

• Unisono

Aim and Purpose

The purpose of this course is threefold:

First, it provides an introduction to global economic history since the end of the Second World War. This will obviously be very selective but provide you with the background to explore particular regions, countries and issues in more detail. 

Second, it is an introduction to the formal rules and organizations that have been implemented on a global level to regulate international economic relations between countries. 

Third, you should learn how to prepare economic analyses of selected economic episodes, countries and institutions. This should help you to prepare for seminar theses and ultimately your Master thesis. There will be a couple of shorter written pieces and presentations and a traditional seminar at the end of the semester. 

Three major texts will be used that are available in the library (some can be downloaded) but which you might also consider buying: 

• Eichengreen, Barry (2019) Globalizing Capital: A History of the International Monetary System, Princeton: Princeton University Press, 3rd edition. 

• Schenk, Catherine R. (2011) International Economic Relations since 1945, New York: Routledge.

• Siebert, Horst (2009) Rules for the Global Economy, Princeton: Princeton University Press. 

Additional background readings: 

• Daunton, Martin (2023) The Economic Government of the World: 1933-2023. New York: Farrar, Straus and Giroux.

• Pomfret, Richard (2011) The Age of Equality: The Twentieth Century in Economic Perspective, Cambridge: Harvard University Press. 

Requirements 

The course compromises participation in class, assignments to work on topics in groups or individually, and presentation of a longer paper at the end of the semester. All assignments are mandatory and will be graded. 

More specifically, there is a summary of a research paper (10%), a topic paper (10%), a policy paper (10%), and a seminar paper (60%). In addition, there are a shorter and a longer presentation (10%).

There will be a feedback discussion after each assignment.

There will also be an introductory meeting on how to write scientifically (Tuesday, 23rd April).

More information is available on Unisono.

Active participation and regular attendance are expected.  

Preliminary Outline

 I. Introduction

How Economies Interact 

Baldwin and Martin (1999), David (2015), Harms (2016), Temin (1999).

 

II. Rules and Institutions 

Transaction Costs and Property Rights 

The Role of International Institutions 

Fratianni and Pattison (1982, 2001), Kindleberger (1986), North (1990), Vaubel (1986, 2006), Willett (2001),Williamson (1989).

 

III. The Global Economy Since 1945

1. Background 

The First Globalization: 1870-1914

The Interwar Years 

Irwin and O’Rourke (2013), Simmons (1993), Temin (1999).

 

2. The Post-War Order 

Bretton Woods and ITO 

Calvin et al. (2021), Bagwell et al. (2016), Bordo and James (2000), Boughton (2002), Boughton (2017), Crowley (2003), Irwin (1994), Irwin and O’Rourke (2013), Obstfeld (2024), Steil (2013, 2018).

 

3. First, Second and Third World

The West 

Communism

The Developing World 

Allen (2001), Fischer (1994), Hertog (2023), Kenen (1999), Kornai (1992), Morck and Yeung (2017), Roland (2018), Yousef (2004).

 

4. Years of Crisis 

Collapse of Bretton Woods

Oilprice shocks, Debt crisis 

 

5. "The End of History" and the New Globalization

Economies in Transition

Regional Integration and Trade

Global Financial Integration and Crises

Baldwin (2016), Bradford and Linn (2011), Granville (2016), Obstfeld and Taylor (2017), Roland (2018).

 

IV. Current Issues and Open Questions

The Trading System

The International Monetary (Non-)System

Bown and Keynes (2020), Eichengreen (2024), Eichengreen and Xia (2019), Gourinchas (2019), Ghosh et al. (2020), Hoekman (2019), Horn et al. (2023), Ilzetzki et al. (2019), Mattoo and Staiger (2019), Obstfeld and Taylor (2017), Rey (2015).  

 

[Subject to changes and extensions; updates will be made available via UNISONO]

Literature

Allen, Robert (2001) The Rise and Decline of the Soviet Economy, Canadian Journal of Economics 34, 859-881.

Bagwell, Kyle, Chad Bown, and Robert Staiger (2016) Is the WTO Passé?, Journal of Economic Literature 54, 1125-1231.

 
Baldwin, Richard (2016) The World Trade Organization and the Future of Multilateralism, Journal of Economic Perspectives 30, 95-116.
 

Baldwin, Richard and Philippe Martin (1999) Two Waves of Globalization: Superficial Similarities, Fundamental Differences, NBER Working Paper 6904.
 

Berger, Helge and Albrecht Ritschl (1995) Germany and the Political Economy of the Marshall Plan, 1947-52: A Re-revisionist View, in B. Eichengreen, ed: Europe's Postwar Recovery, Cambridge: Cambridge University Press, 199-245.


Bordo, Michael D. (2005) The Gold Standard and Related Regimes: Collected Essays. Cambridge: Cambridge University Press.

 
Bordo, Michael D. and Harold James (2000) The International Monetary Fund: Its Present Role in Historical Perspective, NBER Working Paper 7724.

 
Boughton, James M. (2002) Why White, Not Keynes? Inventing the Postwar International Monetary System, IMF Working Paper 02/52.


Boughton, James M. (2017) Southern Accents: The Voice of Developing Countries in International Financial Governance, CIGI Papers 141 (Centre for International Governance Innovation).

 
Bown, Chad and Soumaya Keynes (2020) Why Trump Shot the Sheriffs: The End of WTO Dispute Settlement 1.0, PIIE Working Paper 20-4.

 
Bradford, Colin and Johannes Linn (2011) A History of G20 Summits: The Evolving Dynamic of Global Leadership, Journal of Globalization and Development 2/2, Article 8.

Calvin, Patricia, Giancarlo Corsetti, Maurice Obstfeld and Adam Tooze (2021), Lessons of Keynes's Economic Consequences in a Turbulent Century, CEPR Discussion Paper No. 16610. 

Crowley, Meredith (2003) An Introduction to the WTO and GATT, Federal Reserve Bank of Chicago, Economic Perspectives 4.2003, 42-57.
 

David, Paul A. (1985) Clio and the Economics of QWERTY, American Economic Review 75.2, 332-337.

 
Eichengreen, Barry (2024) International Finance and Geopolitics, Asian Economic Policy Review 75.2, 332-337.

Eichengreen, Barry and Guangtao Xia (2019) China and the SDR: Financial Liberalization Through the Back Door, Quarterly Journal of Finance 9(3), 1950007.
 

Fischer, Stanley (1994) Russia and the Soviet Union Then and Now, in O. Blanchard et al., eds. The Transition in Eastern Europe, Volume 1. Chicago: University of Chicago Press, 221-258.


Fischer, Stanley and Ratna Sahay (2000) The Transition Economies After Ten Years, NBER Working Paper 7664.
 

Fratianni, Michele and John Pattison (1982) The Economics of International Organizations, Kyklos 35, 244-262.
 

Fratianni, Michele and John Pattison (2001) The Bank for International Settlements: An Assessment of its Role in International Monetary and Financial Policy Coordination, Open Economies Review 12, 197-222.

 
Fukuyama, Francis (1989) The End of History?, The National Interest 16 (Summer), 3-18.

G20-Research Group (2008), The Group of Twenty: A History, University of Toronto (www.g20.utoronto.ca/docs/g20history.pdf).

Ghosh, Atish, Jun Il Kim and Mahvash Qureshi (2020) What's in a Name? That Which We Call Capital Controls, Economic Policy 35, 147-208.

 
Gourinchas, Pierre-Olivier (2019) The Dollar Hegemon? Evidence and Implications for Policy Makers, mimeo (http://www.abfer.org/media/abfer-events-2019/ampf/AMPF2019_Pierre-Olivier-Gourinchas-pp.pdf).

 
Granville, Brigitte (2016) Lessons from the Collapse of the Ruble Zone and the Transferable Ruble System, CESifo Forum 4/2016, 19-26.

 
Harms, Philipp (2016) International Macroeconomics, Tübingen: Mohr Siebeck.

Hertog, Steffen (2023) Locked Out of Development: Insiders and Outsiders in Arab Capitalism, Cambridge: Cambridge University Press. 

Hoekman, Bernard (2019) Trade Wars and the World Trade Organization: Causes, Consequences, and Change, Asian Economic Policy Review 15, 98-114.

Horn, Sebastian, Carmen Reinhart and Christoph Trebesch (2023) China as an International Lender of Last Resort, NBER Working Paper 31105.

Ilzetzki, Ethan, Carmen Reinhart and Kenneth Rogoff (2019) Exchange Arrangements Entering the Twenty-First Century: Which Anchor Will Hold?, Quarterly Journal of Economics 134, 599-646.


Irwin, Douglas (1994) The GATT's Contribution to Economic Recovery in Post-War Western Europe, NBER Working Paper 4944.

 

Irwin, Douglas, Petros Mavroidis and Alan Skyes (2008) The Genesis of the GATT, Cambridge: Cambridge University Press. 

Irwin, Douglas A and Kevin H. O'Rourke (2013) Coping with Shocks and Shifts: The Multilateral Trading System in Historical Perspective, in R. Feenstra and A. Taylor, eds: Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Chicago: University of Chicago Press, 11-37.

Kenen, Peter B. (1991) Transitional Arrangements for Trade and Payments among the CMEA Countries, IMF Staff Papers 38, 235-267.


Kindleberger, Charles (1986) International Public Goods without International Government, American Economic Review 76, 1-13.

Kornai, Janos (1992) The Socialist System, Princeton: Princeton University Press.

Mattoo, Aaditya and Robert Staiger (2019) Trade Wars: What do They Mean? Why are They Happening Now? What are the Costs?, NBER Working Paper 25762.
 

McMillan, John and Barry Naughton (1992) How to Reform a Planned Economy: Lessons from China, Oxford Review of Economic Policy 8, 130-143.

 
Morck, Randall and Bernard Yeung (2017) East Asian Financial and Economic Development. NBER Working Paper 23845.

 
North, Douglass (1990) A Transaction Cost Theory of Politics, Journal of Theoretical Politics 2, 355-367.

Obstfeld, Maurice (2024) Economic Multilateralism 80 Years after Bretton Woods, CEPR Discussion Paper No. 18751.

Obstfeld, Maurice and Alan Taylor (2017) International Monetary Relations: Taking Finance Seriously, Journal of Economic Perspectives 31, 3-28.


Reinhart, Carmen and Christoph Trebesch (2016) The International Monetary Fund: 70 Years of Reinvention, Journal of Economic Perspectives 30.1, 3-28.


Rey, Hélène (2015) Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence. NBER Working Paper 21162.

 
Roland, Gerard (2018) The Evolution of Post‐Communist Systems: Eastern Europe vs. China, Economics of Transition 26, 589-614.
 

Simmons, Beth A. (1993) Why Innovate? Founding the Bank for International Settlements, World Politics 45, 361-405.

 

Steil, Benn (2013) The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order, Princeton: Princeton University Press.

 
Steil, Benn (2018) The Marshall Plan: Dawn of the Cold War, Oxford: Oxford University Press.

 
Temin, Peter (1999) Globalization, Oxford Review of Economic Policy 15 (4), 76-89.

VanGrasstek, Craig (2018) The History and Future of the Wolrd Trade Organization, Geneva: WTO (also available online).

Vaubel, Roland (1986) A Public Choice Approach to International Organization, Public Choice 51, 39-57.


Vaubel, Roland (2006) Principal-Agent Problems in International Organizations, Review of International Organizations 1, 125-138.


Williamson, Oliver E. (1989) Transaction Cost Economics, in R. Schmalensee and R. Willig, eds: Handbook of industrial organization 1, Amsterdam: Elsevier, 135-182.

 
Willett, Thomas D. (2001) Upping the Ante for Political Economy Analysis of the International Financial Institutions, World Economy 24, 317-332.

 
Yousef, Tarik (2004) Development, Growth and Policy Reform in the Middle East and North Africa Since 1950, Journal of Economic Perspectives 18, 91-115.