Economics 4382: International Finance (UTD)

Spring 2024

Instructor: Camilo Granados
Class Time and Location: Monday and Wednesday 5:30PM-6:45PM, FO 2.208
Course Office Hours: GR 2.820, Wednesday 4:00PM-5:20PM or by appointment, GR 2.820
Email: Camilo.granados@utdallas.edu
Website: https://cagranados.github.io/intfin4382.html

Course Description

This course explores the functioning of the international financial system. For that we study the foreign exchange rates and markets, the balance of payments accounts, and the international exchange of financial assets as well as the link of these variables and the trade of goods and services between countries.

As we will see, these topics are not independent of the governments and policy decision making. Thus, we also cover the determination of exchange rate regimes, international financial regulations, and even international monetary theory, among others. Finally, some emphasis is put on the financial and trade interlinks between economies that are integrated to the global financial market and how these will imply that the economic outcomes between countries are interrelated too.

Syllabus: [pdf]

Outline:

Part I. EXCHANGE RATES (FT CHAPTERS 12-15)

Introduction
Exchange Rate Fundamentals and the Forex market
Covered and Uncovered Interest Rate Parities
Purchasing Power Parity
Impossible Trinity of International Economics or Mundellian Trilemma

Part II. BALANCE OF PAYMENTS (FT CHAPTERS 16-18)

Open-Economy national income accounting
Current account, unbalanced trade, and national wealth
International Assets: Borrowing and Lending
Intertemporal budget constraint and consumption smoothing

Part III. APPLICATIONS OF THE THEORIES AND ECONOMIC POLICY (FT CHAPTERS 19-20)

Exchange Rate Regimes
Exchange Rate Systems
History of the Exchange Rates
International Crises

Part IV. RECENT RESEARCH ON INTERNATIONAL FINANCE (OPTIONAL PRESENTATIONS)

The Global Financial Crisis and its impact on global markets
The COVID crisis
Other selected topics

Assignments, Exams and Deadlines

Problem set 1: due date 1/31 [Problem Set] [Answer Key] [xls-Q1 Ans]
Problem set 2: due date 2/14 [Problem Set] [Answer Key]
Problem set 3: due date 3/6 [Problem Set] [Answer Key]
Problem set 4: due date 4/5 [Problem Set] [Answer Key]
Problem set 5: due date 4/24 [Problem Set] [Answer Key]

Midterm 1: 2/19 [Answer Key]
Midterm 2: 4/8 [Answer Key]
Final exam: 5/1 5:30pm-6:45pm (FO 2.210)

Lectures and detailed outline:

(this is updated on a regular basis)

Now: Fixed vs. Floating Exchange Rate Regimes
Next: Fixed vs. Fixed Exchange Rate Systems