INTERNATIONAL FINANCIAL ECONOMICS

The course aims at providing the students with a wide knowledge and understanding of macroeconomic fluctuations and financial dynamics in relation to economic policies, exchange rate regimes, and foreign exchange markets.

Macroeconomics, Mathematical Analysis, Statistics.

Knowledge and understanding: The course will offer key theoretical tools to analyze how market forces and institutional arrangements determine the exchange rates in the short and long run, global imbalances, crises, and economic policy responses. Applying knowledge and understanding: The students will be able to understand how economic policies and market forces shape exchange rate fluctuations, and how exchange rate risk, impacting on basic corporate finance transactions, can be covered. Making judgments: We expect students to be able to forecast the shortand long-run impacts of major public policies on exchange rates and other key economic variables. Also, we expect students to attribute the appropriate relevance to the exchange rate dynamics in the global business environment. Communication skills: This course will give the students the possibility to acquire and understand major terms and concepts in order to communicate their ideas, proposals, analysis and critical reasoning in the field of international corporate finance in the most effective and appropriate way. Learning skills: This course will put the students at the center of the learning process by providing them with the tools to enquire and evaluate in an independent way. To strengthen this capacity, students are required to participate actively in class during lectures and through presentations.

Exchange rate (ER) fundamentals, regimes, and history. The supply of money; the ER transmission channel of central bank policies. Forex market; principles of arbitrage; interest parity conditions; hedging the ER risk in corporate business. Purchasing power parity; the monetary and asset approaches to the determination of ER. Balance of Payments; IS-LM-FX model, fixed versus floating ER.

1) Feenstra, Robert C. and Alan M. Taylor, "International Macroeconomics", International Edition, 5th edition, Macmillan Education (compulsory) 2) Lecture notes, scientific articles, and policy reports provided by the instructor.

Lectures, interactive sessions consisting of practices, exercises, guest lectures and seminars, discussions of cases studies and relevant empirical facts.

For attending students, assessment will be based on a compulsory final exam, on a group assignment and a midterm, as well as on class participation. Non-attending students will have to sit a full final exam (100%) with structure described above. The idea behind the assignment is to consider the class section as a think tank that monitors the world economic activity, just like the country desks do at the major international organizations or in an investment bank. Country desks analyse the economic activity in the countries and come up with policy recommendations. A similar attempt can be done even by the class groups if they feel like it.

Strong interest in the topics developed in the course and in reading advanced scientific articles.