JEB050 - International Finance
|Status:||Bachelors - All
Bachelors - elective
BEF - elective
Semester - summer
|Obligatory courses:||JEB004 - Economics II
|Recommended courses:||JEB009 - Macroeconomics I
JEB010 - Macroeconomics II
JEB039 - International Trade
|Course supervisors:|| doc. Ing. Vladimír Benáček CSc.
|Teachers:|| doc. Ing. Vladimír Benáček CSc.
|Assistants:|| Jan Průša M.Phil. (Cantab)
|Schedule:||Lectures will commence on 19 Feb 2013 at 14:00 at IES, Opletalova St. 26, Hall 314. Office hours of Mr. Benacek: Tuesdays 15:30 - 16:00.|
|Announcements:||Please print the most recent file with handouts for your own use before the lecture.|
|Literature:||This is an introductory course and PUGEL T.: Int. Economics, ISBN 978-007-128079-2 paperback, 2009, part III. & IV., pp. 381-657, available in the IES library (most probably in some older editions – no problem) should suffice. However, those who aspire at higher professional rungs, the recommended textbooks are: International Economics by Krugman, Obstfeld & Melitz, 2012; Appleyard & Field; or C. van Marrewijk - see IES or CERGE library (Politickych Veznu St. 7). It is also recommended to cross-reference some of the topics with http://www.internationalecon.com /v1.0/Finance/index.html – the free on-line textbook of international economics by S. Suranovic (its full electronic version costs $ 18). In addition, there are our lectures and handouts.|
|Description:||The objective of this course is to offer basic guidelines how the finances operate in the international scene. We will deal to a large extent with macroeconomics at a level of national banks, IMF and international investors. Exchange rate, balance of payments, international investment, their roles in the economy and policies for sustainability under fixed or adjustable exchange rates are the main topics of our study. Practically all course is based on a multitude of models, explained mainly on graphs, describing a particular feature of the problem. The course is also useful to those interested in international financial management.|
|Content:||1. Balance of payments structure and accounting
2. Current account, national income and expenditure, savings and foreign investments
3. Foreign exchange market, supply and demand for foreign exchange; adjustment process, national bank's intervention and sterilisation, golden standard, currency board
4. Speculation, hedging, covered and open interest parities, spot and forward market
5. Domestic income and the principles of the multiplier in closed and open economies
6. Nominal and real exchange rates, the PPP theories of exchange rate; competitiveness
7. Internal and external balance under fixed and floating exchange rates, IS-LM-BP model
8. Elasticities approach to current account adjustment, Marshall-Lerner condition
9. The adjustment process in the case of external disequilibrium, assignment problem, the absorption approach; the Swan diagram of policy options
10. Monetary approach to balance of payments, the quantity theory of money, specie-flow mechanism and its exchange rate theories
11. Alternative exchange rate regimes, optimum currency area and international currency systems.
|Seminar:||Even though this subject has no official time scheduled for seminars, there will be practiced an interactive communication with enrolled students. Please expect to work on three practical exercises based on the data analysis.|
|Examination dates:||The MIDTERM EXAM is scheduled on 9 April.
The final schedule for the final exam is 21 May at 14.00. The make-ups (for those who failed or were ill) are on 4 June and 18 June.
The dates of exams are valid for ALL students as a group. Their non-attendance means automatically a failing grade.
The discussion of your final individual essays will take place on 14 May. Their final delivery (in a hard copy deposited to the box no. 3) is encouraged prior to 25 May (you will get a symbolic bonus in grading for that) but the deliveries can be extended up to 15 June (without a penalty).
|Course requirements:||Students should consider this course an investment to their professional carrier. There are no investments without commitment. The participants are therefore expected to work continuously during the whole semester. They will be also grouped into teams and asked to work-out three theoretical or policy papers. Both exams /midterm and final/ are compulsory to all enrolled students. The non-participation implies a failure. The final exam will consist of a written test and an essay in English prepared during the semester. The test will cover the solution of problem sets, mainly by means of models and graphs. The creative thinking and understanding of the problem (e.g. described by a model), will be graded higher than a mere memorisation of some facts or formulas. Failure from the final exam implies that the student will have to repeat it by taking the make-up exam. Working-out of an own essay (of about 4-6 pages of your own text of a computer print-out, spacing 1) is a part of the examination. Students can pick up whatever topic of pure theory or applied analysis dealing with international finance. Downloading of internet documents or the usage of existing literature must be quoted in full (otherwise it is considered a plagiarism that results in an unconditional termination of the exam with a failure). These externally acquired parts (in quotation marks) will not be considered your own contribution. You are strongly encouraged to show your independent thinking, including the criticism of the “state of art” and speculative thought experiments. However, your write-up should be consistent with the criterion of economic logic.|
|Downloadable:|| * List of teams & grades 7-5-13
*** Instructions-how to write essays&reports ***
** Syllabus of the course 12Feb2013
01 Handout I. - Balance of payments and forex market 5.3.
02 Czech balance of payments 1993-2009
03 The ABC of financial wisdom in 1 day
04 Handout II. - Interests and Prices 20.3.
05 Assignment #1
06 Assignment #2: Eurocrisis-readings update of 26-3-13
07 Handouts III & IV - Elasticities & OCA
08 Handout V - Multipliers in open economy
09 Handout VI - Macroeconomic Policies
99 Test sample with solutions *
Assignment #3: Data on German trade
Assignment #3: German trade and Euro
Assignment #3: Reading 0 on Euro effects-Baldwin
Assignment #3: Reading 1 on Euro effects-Havranek