NYU Stern School of Business

Undergraduate College


Fall 2010

Instructor Details

Foudy, Joseph


Tuesdays 3:30 to 5:30PM

KMEC 7-66


Course Meetings

TR, 11:00am to 12:15pm

KMC 3-90

Final Exam:

Schedule exceptions
    Class will not meet on:
    Class will meet on:


Course Description and Learning Goals


The objective of this course is to provide future decision-makers with a systematic understanding of critical aspects of the international business environment, especially the basic workings of the macro-economy and the roles of international trade and finance.  We also examine how the forces of globalization affect international business (and your future careers) as well as the challenges of economic development.



The course is divided into three main sections or modules:


I.             The first module looks at the economics of international trade in goods and services. International trade is a key driver of global integration. We examine the role of comparative advantage as a determinant of the location of production and compare it to other theories of trade.  We look at how trade creates economic winners and losers, government policies with respect to trade, and the impact of those policies. 


Students should be able to answer/understand the following questions/concepts:


II.            The second module looks at issues in the modern macro-economy.  Students are introduced to how economists measure the economy and key macroeconomic terms (for example, how we define and measure economic growth, inflation, and unemployment).  We examine how the economy grows in the short and long run, the role of productivity and the impact of the business cycle.  We also explore the role of money, inflation and banking in particular.


Students should be able to answer/understand the following questions/concepts:



III.            The final module of the course surveys the role of money and finance in the world today. Specifically, we examine the role of foreign exchange in global finance. We show how the foreign exchange market can be used to hedge risk or to speculate and we develop some key principles of international financial investment.  We explore what factors affect the value of currencies.  We also examine the role of government policies toward the foreign exchange market, including the choice between fixed and floating exchange rates, strategies to keep currencies under or overvalued, and the use of exchange controls to create impediments to currency flows.  We also examine different issues in the international business environment, including the nature of financial crises, the impact of globalization, the role of foreign investment and multinational firms and current debates on immigration and outsourcing.  Students will also examine the problems of development and the role firms can play in fostering growth.  This is both an ethical issue facing business (How can firms help foster development?) as well as a practical issue (as developing markets are likely to be a key source of future profits). 


Students should be able to answer/understand the following questions/concepts:


In short, the course provides a survey of big-picture global issues. It also serves as the base for the International Studies Project course. In addition, C30.0011 is a prerequisite for several IB elective

courses, including International Business Management, International Financial Management, and International Marketing Management. 




The course has two objectives. 


1.  The first objective is to teach you many of the fundamental concepts, theories and tools of international economics. Some of the information imparted will be quite specific and exams will test your ability to solve them as the problem sets at the end of the chapters of the textbook demonstrate.  However, the true value of the course is in its ability to teach you fundamental concepts about international economics that you can put to use in your future careers.  While exams will feature some problems similar to those found in class and in the text, they will also test your ability to explain, defend or criticize theories or concepts. You will find also that many international economic issues are subject to simplification, distortion or misunderstanding in media coverage.  As informed observers, this class will equip you with the tools to analyze such issues, dispel myths and make informed decisions. 

2.  A second and equally important objective is to encourage critical thinking to aid you in your future business careers.  Students are expected to dissect many leading debates of the day – Do free trade and offshoring lead to lower wages for workers?  Is protectionism economically efficient and if not why do states resort to it?  What strategies can countries employ to aid development?  How can firms assist states in such endeavors while adding to their profitability?  Business leaders maintain their firms’ positions by applying their analytical reasoning skills to daily as well as strategic challenges.  They are able to question conventional wisdoms other executives take for granted or apply common sense analysis to otherwise intractable problems.  Even if students may not use all of the specific tools learned in this or other classes they take as part of their Stern education, the critical thinking skills imparted can last a lifetime.


Students are expected to have done the readings prior to class.  Before or after lectures, students can test themselves based on the problems at the end of the chapters or those used in the class. In some cases, class discussions will follow readings closely.  In others, they will not.  While solving these problems is a good test of your preparedness, please note that understanding the fundamental concepts is more important.  Again, exams will contain a mixture of problem sets as well as essays and short answer questions discussing larger theoretical issues introduced in class.  There will be short reviews and/or review sheets prior to each exam.  I don’t believe in surprises and try to communicate in advance what are the exact expectations for students on the exams.


There will be periodic handouts in class of interesting articles dealing with issues relevant to the course.  It is also recommended that you keep up with current developments in the international business environment, both for class purposes and for your own benefit. You can do this by reading the relevant articles in a good newspaper (e.g., Financial Times, Wall Street Journal, New York Times) or weekly magazine (e.g., the Economist). You are encouraged to bring up current events for discussion in class.


Course Pre-Requisites

Microeconomcis or equivalent


Course Outline


Please note that schedule and reading assignments are subject to change.


Class 1 / Sept 7                                   

Introduction– A Global World / HANDOUT OF SYLLABUS / OVERVIEW

Required Reading:  Ch. 1, Ch 3 from Pugel.

Globalization:  The Story Behind the Numbers,” IMF Finance & Development, March 2002.

Class 2 / Sept 9                       

The Rationale for Trade– Comparative Advantage

Required Reading: Ch 4 from Pugel.


Class 3 / Sept 14           

The Effects of Trade– Winners and Losers

Required Reading: Ch 5 from Pugel.


Class 4 / Sept 16

                                    Alternative Theories of Trade

Required Reading: Ch 6 from Pugel.


Class 5 / Sept 21

                                    Trade Policy: Tariffs

Required Reading: Ch 8 from Pugel.


Class 6 / Sept 23

                                    Trade Policy: Non-Tariff Barriers

Required Reading: Ch 9 from Pugel.

Carolyn Cui, “Price Gag Puts Spice in Sugar-Quota Fight,” The Wall Street Journal, March 15, 2010

Class 7 / Sept 28

Arguments For and Against Protectionism

Required Reading: Ch 10 from Pugel.

Hufbauer and Grieco, “The Payoff From Globalization,” The Washington Post, June 7, 2005.


Class 8 / Sept 30

Dumping and Export Subsidies

Required Reading:  Ch 11 from Pugel.


Class 9 / Oct 5

            FIRST EXAM (Classes 1-8 only / Pugel Text and Other Trade Readings)



Class 10 / Oct 7

Introduction and National Income Accounts

Required Reading:  Ch 6 and 7 from Krugman/Wells.


Class 11 / Oct 12

National Income Accounts (Continued), Start of Long Run Growth

Required Reading:  Ch 8 from Krugman/Wells

Frederic Mishkin (Federal Reserve Governor), “Headline vs. Core Inflation in the Conduct of Monetary Policy,” Speech, October 20, 2007 (access via Blackboard)


Class 12 / Oct 14

Long-Run Economic Growth

Required Reading:  Ch 9 from Krugman/Wells.

                                    William Lewis, “The Power of Productivity, The McKinsey Quarterly, May 2004

Class 13/ Oct 19

Long-Run Growth (Continued), Savings, Investment and the Financial System

Required Reading:  Ch 10 from Krugman/Wells.


Class 14 / Oct 21

The Economy in the Short Run/Fluctuations

Required Reading:  Ch 11 from Krugman/Wells.


Class 15 / Oct 26

Aggregate Demand and Aggregate Supply / Fiscal Policy and Deficits

Required Reading:  Ch 12 and 13 from Krugman/Wells.

Simon Johnson and James Kwak, “Four Steps to US Fiscal Health,” Op-Ed. Project Syndicate, August 2010


Class 16 / Oct 28                       

Money and Banking I

Required Reading:  Ch 14 from Krugman/Wells.

                                    Krugman, Babysitting Parable

Class 17 / Nov 2              

                                    Money and Banking II

Required Reading:  Ch 15 and Selected Portions of 16 (pages 443-453,463-466) from Krugman/Wells.




Class 18 / Nov 4           

Balance of Payments (NOT ON SECOND EXAM)

Required Reading: Ch. 16 from Pugel.

Ben Bernanke (Federal Reserve Chairman), speech on Global Imbalances from 2007 (access via Blackboard)

C. Fred Bergstren, “New Imblances Will Threaten Global Recovery” The Financial Times, June 10, 2010


Class 19 / Nov 9

SECOND QUIZ (COVERS all lectures based on Hall Lieberman)

Class 20 / Nov 11           

The Foreign Exchange Market

Required Reading: Ch 17 from Pugel.


Class 21 / Nov 16           

Foreign Exchange and Investment I  (Futures, Options and Swaps)

Required Reading: Ch 18 from Pugel.


Class 22 / Nov 18           

The Determination of Exchange Ratesand Purchasing Power Parity

Required Reading: Ch 19 from Pugel.           


Class 23 / Nov 23           

Exchange Rate Policy Options I

Required Reading: Ch 20 from Pugel.


Class 24 / Nov 30           

Exchange Rate Policy Options II

Required Reading: Part of Ch 25 from Pugel. pp. 644-655 (also “What Role for Gold?”, pp. 634-5).


Class 25  / Dec 2           

Financial Crises

Required Reading: Ch 21 from Pugel,

Roger Lowenstein, “Triple-A Failure,” The New York Times, April 27, 2008

“Trader Made Billions Focusing on Subprime,” The Wall Street Journal, January 15, 2008


Class 26 / Dec 7           

Financial Crises II and The Challenges of Development

                                    Required Reading: Ch 14 from Pugel.

Video Clip from the Commanding Heights (Episode 3, access via “External Links” on Blackboard)

Class 27 / Dec 9           

Globalization - FDI, Multinational Corporations and Immigration

Required reading:  Ch 15 from Pugel.


Class 28 / Dec 14           

Globalization – A New, Flat World?           

Required Reading:  Ch 13 from Pugel.

Thomas Friedman, “It’s a Flat World, After All,” The New York Times Magazine, April 3, 2005, p. 33 (access via Blackboard)


Semester Wrap-Up



December 17th (Friday)            FINAL EXAM  / FROM 12PM to 1:50 PM                          Good Luck J


Required Course Materials

COURSE MATERIALS             Both textbooks are available in hard copy or as e-books.


Required textbooks:             Custom reader for Thomas Pugel, International Economics, 14th edition, Irwin McGraw-Hill, 2008 (Abbreviated Pugel)

Custom reader for Krugman Wells, Macroeconomics, 2th edition, Worth, 2009.   (Abbreviated Krugman)


Other readings will also be posted on blackboard or with links for download from the library.


Assessment Components

The course is designed to be challenging and stimulating without assuming a prior background in the field.  Distribution of grades will be roughly as follows:  30-35% A grades, 60-50% B grades, 5-10% C grades or below.  The actual distribution of grades varies somewhat by class, but this should serve as a good guide.  Please note that ALL sections of EGB have a similar distribution to be fair to all students.  The course grade will be based on the following items:

First Exam             30%

Second Exam             30%

Final Exam             40%

Memo (s)  (if assigned)            Ungraded


The coverage and dates for the quizzes are:

First Exam: Covers Part One, TUESDAY, October 5th

Second Exam: Covers Part Two, TUESDAY, November 9th

Final Exam: Covers Part Three, FRIDAY, December 17th (12PM to 1:50PM)



At NYU Stern we seek to teach challenging courses that allow students to demonstrate their mastery of the subject matter.  In general, students in undergraduate core courses can expect a grading distribution where: 

Note that while the School uses these ranges as a guide, the actual distribution for this course and your own grade will depend upon how well you actually perform in this course.



The process of assigning grades is intended to be one of unbiased evaluation. Students are encouraged to respect the integrity and authority of the professor’s grading system and are discouraged from pursuing arbitrary challenges to it.

If you believe an inadvertent error has been made in the grading of an individual assignment or in assessing an overall course grade, a request to have the grade re-evaluated may be submitted. You must submit such requests in writing to me, including a brief written statement of why you believe that an error in grading has been made.


Professional Responsibilities For This Course




In-class contribution is a significant part of your grade and an important part of our shared learning experience. Your active participation helps me to evaluate your overall performance.
You can excel in this area if you come to class on time and contribute to the course by:




Classroom Norms


Stern Policies

General Behavior
The School expects that students will conduct themselves with respect and professionalism toward faculty, students, and others present in class and will follow the rules laid down by the instructor for classroom behavior.  Students who fail to do so may be asked to leave the classroom. 


Collaboration on Graded Assignments
Students may not work together on graded assignment unless the instructor gives express permission. 


Course Evaluations
Course evaluations are important to us and to students who come after you.  Please complete them thoughtfully.


Academic Integrity

Integrity is critical to the learning process and to all that we do here at NYU Stern. As members of our community, all students agree to abide by the NYU Stern Student Code of Conduct, which includes a commitment to:

The entire Stern Student Code of Conduct applies to all students enrolled in Stern courses and can be found here:

Undergraduate College: http://www.stern.nyu.edu/uc/codeofconduct
Graduate Programs: http://w4.stern.nyu.edu/studentactivities/involved.cfm?doc_id=102505

To help ensure the integrity of our learning community, prose assignments you submit to Blackboard will be submitted to Turnitin.  Turnitin will compare your submission to a database of prior submissions to Turnitin, current and archived Web pages, periodicals, journals, and publications.  Additionally, your document will become part of the Turnitin database.


Recording of Classes

Your class may be recorded for educational purposes


Students with Disabilities

If you have a qualified disability and will require academic accommodation of any kind during this course, you must notify me at the beginning of the course and provide a letter from the Moses Center for Students with Disabilities (CSD, 998-4980, www.nyu.edu/csd) verifying your registration and outlining the accommodations they recommend.  If you will need to take an exam at the CSD, you must submit a completed Exam Accommodations Form to them at least one week prior to the scheduled exam time to be guaranteed accommodation.


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