Learning outcomes:

Scope: The study and understanding of the functioning of an open economy. Examines the functioning of the open economy and the effectiveness of fiscal and monetary policy under different exchange rate regimes

Aim: Students are given the tools of analytical techniques they will need to function effectively as active participants in the ever-changing world we live in. The main objective of the course is to understand Fiscal and Monetary Policy in the open economy, the balance of payments mechanism, the functioning of the foreign exchange market and the determination of the exchange rate.


  • Code :             X42
  • Semester :     4th
  • Effort :              7.5 ECTS
  • Hours :             3 per week
  • Type :                Economics
  • Department : Economics
  • Exams :             Yes

Course Contents:

  • Fiscal and Monetary Policy
  • The Balance of Payments
  • Foreign exchange market and exchange rate determination
  • Balance and Economic Policy in a Small Open Economy
  • Mundell-Fleming model with immediate adjustment of domestic interest rates to international (BP parallel to income axis)
  • The Mundell-Fleming model of lagging domestic interest rates internationally (BP with positive slope)
  • Employment and Unemployment
  • Inflation and Unemployment
  • Business circles
  • Economic Growth