Student guide Facoltą di Economia A.A. 2007/08

International monetary economics
Aim of the course
The aim of the course is to give the student a framework to interpret and comment the major evolutions on international financial markets.
The course will cover the following major developments: exchange rate determination, open economy macroeconomic policy, international monetary system, introduction to global asset allocation. Presentation of the various topics will mainly rely on a geometrical approach. Continuous reference to real-life economic developments is a characteristic of the course.
Part I – Exchange rate  determination
1. Introduction (foreign exchange market, history of exchange rate arrangements)
2. Exchange rates and national prices (PPP)
3. Exchange rates and interest rates (CIP, UIP, market efficiency)
4. The Mundell-Fleming model of exchange rate determination (a quick revision)
5. Asset models of exchange rate determination: Monetary model
6. Asset models of exchange rate determination: Overshooting model
7. Asset models of exchange rate determination: Fixed or Flexible
Part II- Policies and Institutions
8. Balance of payment crises: theory and recent evidence
9. IMF: what is it? What would it become?
10. The role of IMF in poor countries
11. Going beyond monetary considerations in the EMU
PART III International Asset Allocation: theory and practice
12. Scale and Type of Capital Flows
13. The Financial Assets in Question
14. The Financial Assets in Question (cont'd)
15. Modelling Expected Returns
16. From Expected Returns to Optimal Investment Decisions

Detailed Syllabus on-line:

There will be a written exam at the end of the course.
Reading list
Copeland, L.S., Exchange Rate and International Finance, 4th ed., Prentice Hall, 2005.
De Grauwe, P., The Economics of Monetary Integration, 6th edition, OUP, 2005.
S.Suranovic, International finance: theory and policy analysis, (free access on the web).

Additional material will be suggested at the beginning of the course and will be posted on the web page of the course