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- Term 2
The objective of this option course: i) an analytical training in the critical use of theories of international finance; and ii) an opportunity for students to develop critical understanding of the current policy debate on regional intergration and globalisation, management of open developing economies with large external shocks, dynamics of currency and financial crises, management of exchange rates and capital accounts, international monetary and financial architecture, and other global economic issues. Throughout the course, emphasis is placed on understanding theories as well as on testing evaluating these theoretical propositions in the light of empirical evidence and real world issues.
The course in International Finance deals with International Finance and monetary issues. It covers topics such as foreign aid, economic development and the gap model; theories of international capital flows; growth-cum-debt model and debt sustainability; foreign exchange markets and exchange rate policies; macroeconomics models with capital flows, currency crises models; theory of optimal currency area and monetary union; management of capital flows; currency crisis models; theory of optimal currency area and monetary union; management of capital flows; dynamics of global financial crises, issues of international governance and cooperation in managing financial flows.
Objectives and learning outcomes of the module
On successful completion of the course, students will be able to:
- Show an understanding of the theories of international finance and monetary issues and apply them to real world situations.
- Differentiate the models with capital flows and show their relevance to the global financial crisis.
- Discuss the issues of international governance and management of financial flow.
Method of assessment
Assessment weighting: Exam 70% / Coursework 30% (1 essay). All coursework is resubmittable.
While the comprehensive reading list will be provided for each topic covered in the course below and separately for each tutorial seminar week by week, a basic exposition of standard theories can be found a number of text books popularly used in International Economics courses such as:
- Foundations of International Macroeconomics, by Obstfeld Murice and Kenneth Rogoff (1996), MIT Press.
- Development Macroeconomics, 4th Edition, by Pierre-Ricard Agenor and Peter J. Montiel, Princeton University Press (2015) - good textbook with focus on development.
In addition, you may find it useful to consult the following reference books for specific topics:
- Jones Ronald W. and Peter B. Kenen eds (1984-85), Handbook of International Economics, Volumes 1 and 2, North-Holland.
- Grossman Gene and Kenneth Rogoff eds (1995), Handbook of International Economics Volume 3, North-Holland
- Gita Gopinath, Elhanan Helpman and Kenneth Rogoff eds (2014), Handbook of International Economics Volume 4, North Holland.
- Lance Taylor (2004) Reconstruction Macroeconomics: Structuralist Proposals and Critiques of the Mainstream. Cambridge, Mass.: Havard University Press.
- World Trade and Payments: An Introduction, 10th Edition, by Richard E. Caves, Jefferey A. Frankel and Ronald W. Jones, Addison Wesley Longman (2007) - a good all round undergraduate textbook.
- International Economics: Theory and Policy, 7th Edition, by Paul R Krugman and Maurice Obstfeld, Addison Wesley Longman (2005) - a popular undergraduate textbook in North America on the subject.