Student guide Facoltà di Economia A.A. 2004/05 Lauree Specialistiche

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 areas: exchange rate determination, open economy macroeconomic policy, international monetary system. The level of presentation of the various topics will utilise mainly a geometrical approach. Continuous reference to real-life economic evolutions is a characteristic of the course.

1. Introduction (balance of payments, the foreign exchange market, a brief history of exchange rate arrangements) (C) chpt 1;

2.   exchange rates and national prices (PPP) (C) chpt 2;

3.   exchange rates and interest rates (CIP, UIP, market efficiency) (C) chpt 3, 11;

4.   the Mundell-Fleming model of exchange rate determination (a quick revision)  (C) chpt 6;

5.   asset models of exchange rate determination: Monetary model (C) chpt 5;

6.   asset models of exchange rate determination: Overshooting  model (C) chpt 7;

7.   asset models of exchange rate determination: Portfolio model (C) chpt 8;

8.   topics I: Optimum currency areas and the European Monetary Union (C) chpt 10 or (DG) chpt 1,2,3;

9.   topics II: Currency crisis;

10. topics III: The regulation of the International Financial System.

There will be a written exam at the end of the course.

A detailed reading list will be distributed at the beginning of the course and will be found on the web at:

Past references include:

(C)    Copeland, L.S., Exchange Rate and International Finance, third edition, Addison-Wesley, 2000.

(DG) De Grauwe, P., The Economics of Monetary Integration, fifth edition, OUP, 2003.

(K)    Kreinin, M.E., International Economics. A Policy Approach, eighth edition, Dryden.