International Finance

2022/2023

Academic Year

ENG

Instruction in English

4

ECTS credits

Delivered at:

Faculty of World Economy and International Affairs

Course type:

Compulsory course

When:

4 year, 1, 2 module

Instructor

Guseva, Olga

Course Syllabus

Abstract

This course aims to explore the important concepts and major issues in open macroeconomics such as the determination of exchange rates and how economic policies work in an open economy with free trade of goods and asset. The study of International Finance involves open economy issues such as the balance of payments, interest parity as an equilibrium condition for foreign exchange market, purchasing power parity describing the long-run behavior of exchange rates and the transmission mechanism of monetary and fiscal policies from the perspective of open-economy general equilibrium. Student who successfully completes this course will have their own logic and way of thinking to come to a conclusion on various issues in open economy.

Learning Objectives

• To understand major concepts frequently used to analyze the dynamics of open economy and evaluate how effective monetary and fiscal policies are as an economist based on the theories of open macroeconomics
• To understand intermediate analytical instruments of economics such as graphs and figures describing the general equilibrium of open economy, and basic calculus tools describing economic variables such as exchange rates, interest rates and inflation rate are inter-related in an open economy

Expected Learning Outcomes

• To be able to graphically describe how all economic variables are inter-related and how policy changes are transmitted through the open economy
• To be able to intuitively figure out the implications of current economic issues from recent news articles
• To be able to mathematically describe the equilibrium in various markets in an open economy

Course Contents

• National Income Accounting for an Open Economy
• The Balance of Payments Accounts
• Foreign Exchange Market I: The Role of FX Market
• Foreign Exchange Market II: Interest Rate Parity
• Money, Interest Rates and Exchange Rates
• The Exchange Rate in the Long Run I: Purchasing Power Parity
• The Exchange Rate in the Long Run II: Real Exchange Rate
• The Exchange Rate in the Short Run I: Keynesian Approach
• The Exchange Rate in the Short Run II: Macroeconomic Policy
• Fixed Exchange Rates I: Foreign Exchange Intervention
• Fixed Exchange Rates II: Balance of Payment Crisis
• Determinants of the Balance of Trade and Payments
• International Monetary Systems I: Past to Present
• International Monetary Systems II: International Policy Coordination

Assessment Elements

• Midterm
• Final exam
• Assignment
• Attendance

Interim Assessment

• 2022/2023 2nd module
  0.4 * Midterm + 0.4 * Final exam + 0.1 * Assignment + 0.1 * Attendance

Bibliography

Recommended Core Bibliography

• Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2018). International Economics: Theory and Policy, Global Edition (Vol. Eleventh edition). New York: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1649946

Recommended Additional Bibliography

• Melvin, M. (2012). International Money and Finance (Vol. 9th ed). San Diego: Academic Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1204281