1. TU-91.2013 ECONOMICS of EUROPEAN INTEGRATiON Riikka-Leena Leskelä Fall, 2015

2. 2 Course Organization Instructor PhD Riikka-Leena Leskelä riikka-leena.leskela@nhg.fi 050-4100 737 Office hours by appointment Assistant An Chen an.chen@aalto.fi Course home page in MyCourses portal (mycourses.aalto.fi)

3. 3 How to Pass the Course?  No final exam… BUT 3 credits = 80h of work  Active participation in class mandatory! -Sessions Mondays at 8-11 -Sept 7-Oct 12th  Plenty of weekly written assignments - Learning diary - Pre-lecture assignments  ”Behind the Headlines” news analysis assignment (due Nov 2nd)

4. 4 Grading Policy?  Class participation compulsory Participation (6x1p)6p Learning diaries (6x4p)24p Pre-lecture assignments (5x8p)40p News analysis30p TOTAL100p

5. 5 How to Get the Points?  Participation -Be present and awake! -Remember to sign your name on the list

6. 6 How to Get the Points? Cont’d…  Learning diaries -Write down your THOUGHTS (one page) after each session, for example: What was of particular INTEREST to your? What IDEAS did you get? Can you RELATE the topic to something you have learned in another course/read about in the newspapers/observed in real life? -DO NOT write a summary of the content or what happened ”first we did group work on this and then the teacher talked about that…” -DL midnight the following THURSDAY (via MyCourses) I can read them before next ses sion

7. 7 How to Get the Points? Cont’d…  Pre-lecture assignments -At the end of each ”lecture” an assignment will be handed out (also posted in MyCourses and Noppa) Questions based on assigned readings -You should complete the assignment BY THE next lecture AND upload to MyCourses (and bring a copy of the answers with you to class, if you need a reminder for the class discussions) -Independent work – DO NOT copy from friends or internet!

8. 8 How to Get the Points? Cont’d…  ”Behind the Headlines” – News analysis -Follow news on topics related to EU, EMU (or economic integration elsewhere) Read newspapers, magazines Search the internet Can be older ”news” as well -Based on theories/concepts learned during the course, explain the economics behind the stories -Include the news as an appendix in your report -Report (excluding cover page, table of contents and appendices) should be maximum 10 pages -DL Mon Nov 2nd, upload to MyCourses -INDIVIDUAL assignment – DO NOT copy text directly

9. 9 What Will We Learn? 7.9.Background on economic integration & EU 14.9 Session on Monetary Unions -Costs and benefits of MUs -Traditional Optimal Currency Area (OCA) Theory 21.9 Seminar on European Economic and Monetary Union (EMU) -Critique of OCA Theory Endogeity theory vs. specialization theory -Evaluation of EMU

10. 10 What Will We Learn? Cont’d 28.9. Seminar on Monetary Policy in EU -Goals and Tools of ECB -Evaluation of ECB policy -Financial crisis of 2008 5.10. Seminar on Fiscal Policy in EMU - The Stability and Growth Pact Content and motivation - Case Greece Need of reform? 12.10. Seminar on the future of the EU and EMU -Euro crisis -Enlargement of EU and EMU

11. 11 Textbooks and Other Readings -De Grauwe: Economics of Monetary Union, 6th ed., Oxford University Press, (or other editions) -McDonald and Dearden: European Economic Integration, 4th ed., Prentice Hall, 2005 (or other editions) -Selected journal articles to be announced

12. 12 OK, Let’s Get Started!  Form groups of 4 people  Write down things you already know about -Economic integration -The European Union & European Economic and Monetary Union You don’t have to constrain yourself to economics!  Draw a mindmap to present your thoughts and how they relate to oneanother

13. 13 Pre-Lecture Assignment for Next Week Read  Beginning of Ch 3 of Dearden & McDonald (scanned version in MyCourses)  Mundell, Robert (1961), A Theory of Optimum Currency Areas, American Economic Review 51, 509-517. (http://www.columbia.edu/~ram15/ie/ie-12.html)http://www.columbia.edu/~ram15/ie/ie-12.html

14. 14 Pre-Lecture Assignment for Next Week Cont’d Answer the following questions: 1.What are the costs and benefits of monetary unions? 2.Mundell claims on the one hand that the entire world is not an optimum currency area, and on the other that one country may not be an optimum currency area either. How does he motivate his claim? 3.According to Mundell, which factors determine an optimum currency area? Upload your answer to MyCourses by Mon Sept 14th, 8am!