International Finance

Latest update: March 21, 2024.

Office: D521 (Building 2)

Office hours: by appointment

Course Description

The objective of this course is to introduce basic concepts in international finance and to acquire knowledge about the international financial system. By the end of the course, you must understand the functioning of international financial markets, gain knowledge regarding the key international financial institutions, and be able to discuss issues of monetary policy and exchange-rate policy. The covered topics include: (i) the functioning of exchange rate markets; (ii) money, interest rates and exchange rates; (iii) their relation in the short and the long-run; (iv) the functioning of central banks and basic issues in monetary policy; (v) exchange rate policies and regimes; (vi) historical overview of the international financial system and institutions, including the euro area.

Since the course is offered for a broad range of Master programmes (finance, economics, management and accounting, among others), the course requires only little preliminary knowledge from the students, such as basic macroeconomics and financial calculations.

The course description is also available in a pdf file.

Assessment

In line with the Bologna standards, there is a continuous assessment of students. This has three elements:

• Individual assignments: 20%

• Short quizzes in classes: 30%

• Final exam: 50%

For this type of assessment, the student must have at least 80% class attendance. To pass the course, the overall grade must be at least 9.5 (on a scale of 0 to 20).

Syllabus

1. Introduction (slides)

   1. Why Study International Finance?

   2. A Quick Overview of the Financial System

2. Basic Concepts and Markets (slides)

   1. Money

   2. Interest Rates

   3. Exchange rates and the foreign exchange market

3. Exchange Rates and Open-Economy Macroeconomics (slides)

   1. Money, Bond and Foreign Exchange Markets

   2. Money, Interest and Exchange Rates

   3. Price Levels and the Exchange Rate in the Long Run

4. Exchange Rate Policies (slides)

   1. The Balance of Payments

   2. Central Banks and Monetary Policy

   3. Foreign Exchange Interventions

5. The International Financial System (slides)

   1. An Historical Overview

   2. The Euro and the Economic and Monetary Union

Textbooks

The main textbook is

• Mishkin, 2010, The Economics of Money, Banking and Financial Markets, Business School Edition, Pearson.

For some topics I also rely on

• Krugman, Obstfeld and Melitz, 2012, International Economics: Theory and Policy, Ninth Edition, Pearson.