Economic Foundations of International Affairs

University of St. Gallen (with Reto Föllmi)

Fall 2015

Globalization has been a key theme of the twentieth and twenty-first centuries. Both technical progress and the reduction of political barriers have caused international trade to reach unprecedented levels.  In this course, students will learn the major causes and consequences of globalization and deepen their understanding of international economics.  By first presenting the core models and analytical tools in the field, the course will then aim to discuss recent empirical evidence, such as the effects of liberalization on economic growth, the political economy of free trade agreements.


The first part of the course comprises four lectures of four hours and serves as an introduction to the key concepts of international economics and current empirical methods in the field. In the second part, students are expected to familiarize with these key concepts by preparing a presentation that will be held as a block course on three days. The first part of the course provides an introduction to the theoretical and empirical fundamentals of international economics. It consists of four sections. In the first section, we will introduce theories that attempt to explain why countries trade with each other an. We will learn about the gains from trade and how these gains are distributed. In the second section, the course will present monetary aspects of globalization by exploring the causes of changes in the exchange rates, the effects of exchange rate regimes, the nature of currency crises, and the structure of global capital imbalances. In the third section, the course will cover the political economy of trade policies, namely the politics of trade agreements, income inequality, and international migration. In the fourth section, we will introduce the methodological foundations of empirical international economics.