25752 - International Finance

Learning outcomes

The aim of the class is to enable students to understand international economic integration and fundamental cross-national imbalances. Mainstream recent theoretical and empirical contributions on trade will be presented., with a focus on the post 2008 financial crisis. At the end of the course, students will be able to understand monetary integration, international financial flows, trade policies, income distribution and welfare effects of trade restrictions, trade and environment, geographic agglomeration, social choices and the political economy of trade.

Course contents

1. Some basic concepts in international finance: the balance of payments
2. Some basic concepts in international finance: the foreign exchange market
3. Spot and forward exchange rates: some more basic issues
4. Alternative exchange rate regimes and monetary policy
5. Exchange rate determination: the purchasing power parity
6. Exchange rates, interest rates and the trade balance
7. The monetary approach to the balance of payments and the exchange rate
8. The debate on fixed vs. flexible exchange-rate regimes
9. The European Monetary Union. Monetary policy and the European Central Bank
10. Currency crises

Readings/Bibliography

Main textbook is:
P. Krugman - M. Obstfeld - M. J. Melitz, International Finance:Theory and Policy, Global Edition, 10th edition, Pearson, 2015.

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