25752 - International Finance

Course Unit Page


This teaching activity contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.

No poverty Quality education Decent work and economic growth Industry, innovation and infrastructure

Academic Year 2021/2022

Learning outcomes

The goal of the course consists in providing students with all the knowledge to interpret the dynamics of exchange rates as well as the constraints imposed by international financial markets on domestic monetary and fiscal policies. After taking this course each student will be able to: - interpret the dynamcs of capital flows in modern economies; - study global imbalances caused by Balance of Payments fluctuations; - interpret major global economic shock and figuring out the best policy mix needed to cope with it.

Course contents

A tentative schedule will cover the following list of topics:

1. Introduction to the course. Exchange Rate: spot, real, cross rates. Forward and futures. The exchange rate market.

2. Arbitrage conditions. Exchange rate risk. Exchange-Rate regimes. The central bank’s balance sheet in open economy.

3. Balance of payments. The ‘J’ effect and the pass through effect. The absorption approach to Balance of Payments.

4. Economic Policy in Open Economy: the Mundell Fleming model with perfect and imperfect capital mobility. Optimal Currency Areas.

5. The monetary approach to balance of payments.

6. Purchasing Power Parity.

7. Overshooting of Exchange-Rate.

8. The portfolio balance approach to exchange-rate determination.

9. Eurobonds and Eurocurrency market.


Pilbeam K., “International Finance”, fourth edition, 2014, Palgrave McMillan

Additional readings will be distributed in class.

Teaching methods

The course is offered on a traditional in-class lecture: there will be 10 class meetings, each of them is 3 hours-long, for a total of 30 hours.

Assessment methods

Written in class exam (2-hours). 

The exam grade will be expressed on a 30th basis. 

18-23: the student has sufficient preparation and analytical skills, spread however, over just few topics taught in the course, the overall jargon is correct

24-27: the student shows and adequate preparation at a technical level with some doubts over the topics. Good, yet not to articulate analytical skills with the use of a correct jargon

28-30: Great knowledge about most of the topics taught in the course, good critical and analytical skills, good usage of the specific jargon

30L: excellent and in depth knowledge of all the topics in the course, excellent critical and analytical skills, excellent usage of specific jargon.


Teaching tools

Slides, overheads and additional set of notes (copyrighted) will be distributed in class.

Office hours

See the website of Massimiliano Marzo