Open Economy Macroeconomics

Module code: ECON 3535

Module description

The module will provide an open economy examination, looking at the relationship between the domestic economy and the rest of the world. The first term will critically analyse theories of consumption and investment. This will be followed an examination of the problems caused by asymmetric information in financial markets, how central banks determine interest rates and the monetary transmission mechanism. Finally, we examine the impact of monetary and fiscal policies in an open economy using the Mundell-Fleming model.

The second term continues the open economy examination to consider Inflation and Unemployment. Shocks and policy responses are also examined with an Open Economy framework.

The emphasis will be on the global economy and the critical nature of interactions between the real economy, finance and international institutions in theory and policy making. The tool kit used to examine the discussion will make use of the IS/LM/BP framework allowing the incorporation of external balances into macroeconomics.

Contact hours per student per year

  • Lectures: 24 hours
  • Tutorials: 22 hours


  • Individual essay (1500 words): 40%
  • Closed book exam (120 mins): 60%

Additional costs: No extra costs other than purchase of books