This course aims to deepen students’ understanding of how international capital flows and trade link economies across the globe. The course starts with reviewing how financial markets interact with the real economy. It then moves on to discussing why countries trade and, importantly, why (net) international capital flows in a certain direction. While international linkages help improve economic efficiency, these also give rise to vulnerabilities which can expose countries to the possibility of sovereign debt and currency crises. The course concludes by looking at some of these vulnerabilities, and policy measures which countries can take to minimise these. In doing so, the course will cover both relevant theoretical frameworks and important economic events in recent history.

*This unit is designed for students who have only basic understanding of economics. While the unit uses various mathematical models throughout, this is done in a way so that students with limited mathematical skills can also understand the content and contribute to the discussion.