25752 - International Finance

Learning outcomes

This course deals with the macroeconomics of open economies. We will address issues such as the role of monetary and fiscal policy in an open economy, the determination of the balance of payments, the level of economic activity, and inflation, the choice between fixed versus flexible exchange rate, causes and effects of currency crises in emerging economies, the process of economic and monetary integration in Europe. At the end of the course, students will be able to understand the relationship between interest rates, exchange rates, and the balance of payments, how this relationship depends on the exchange rate regimes, and the possibilities and limitations of economic policy in a globalized world.

Course contents

1. Some basic concepts in international finance: national and international accounts
2. Some basic concepts in international finance: exchange rates and the foreign exchange market
3. Exchange rates: the monetary approach in the long run
4. Exchange rates II: the asset approach in the short run
5. Balance of payments: the gains from financial globalization
6. Exchange rates, interest rates and the trade balance
   
7. The debate on fixed vs. flexible exchange-rate regimes: international monetary experience
8. Exchange rate crises
9. The European Monetary Union. Monetary policy and the European Central Bank

Readings/Bibliography

Main textbook is:

R. C. Feenstra - A. M. Taylor, International Macroeconomics, 4th edition, Worth Publishers, 2017.

Teaching methods

Class lectures. Although not compulsory, participation to classes is highly recommended to help dealing with the course's requirements

Assessment methods

Students' assessment will be based on a closed-book written test, aimed at evaluating their comprehension of the main concepts developed throughout the course. It will also assess students' ability to analyze current real-world issues and problems, related to international economics and finance.

After the first half of classes, students have the opportunity to take a mid-term exam, followed by a final exam at the end of classes. The tests will consist of a true/false section and one open-ended question. The final grade will be the average of the two marks of the intermediate tests.

Alternatively, students can take the full exam (based on the entire program) at the end of the course. In this case, the exam will be a written test that includes three open-ended questions. A correct answer to the first question is necessary and sufficient condition to pass the exam.

Students can reject a passing grade (i.e. above 17/30) only once. To this end, he/she must email a request to the instructor, who will acknowledge receipt of the message.

Teaching tools

Teaching material (class notes and further readings) will be available on Moodle platform at: iol.unibo.it

Office hours

See the website of Giorgio Bellettini