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2012/2013  KAN-CM_SU9A  International Monetary Economics

English Title
International Monetary Economics

Course information
Language English
Exam ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration Summer
Course period NOTE: The course schedule is at the moment ONLY available at www.cbs.dk/summer
Time Table Please see course schedule at e-Campus
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Faculty - Nektarios Aslanidis, Universitat Rovira i Virgili
    Patricia Plackett - Department of Operations Management
Main Category of the Course
  • Economics, macro economics and managerial economics
Last updated on 23-04-2012
Learning objectives
At the end of the course students should be able to:
  • be well versed on the major historical developments of the international monetary system that have led to the current status-quo;
  • recount the basics of open-economy macroeconomics;
  • understand the parity relationships between spot and forward exchange rates;
  • explain the macroeconomic foundations for exchange rate determination, extending the basic aggregate supply and demand model to accommodate the external sector;
  • examine a number of well-known models of exchange rate determination, such as the Mundell-Fleming approach and the flexible-price monetary model;
  • analyse and discuss fixed versus flexible exchange rate regimes;
  • give an account of the development of the European Monetary System and the European Monetary Union.
Prerequisite
1st and 2nd year undergraduate Macroeconomics (compulsory)
Examination
International Monetary Economics
4 hour written exam:
Type of test Written Exam
Marking scale 7-step scale
Second examiner No second examiner
Exam period Summer Term
Aids Closed Book
Duration 4 Hours
Final Exam : 4-hour written exam (closed book).
Includes:
Part A: Multiple choice questions (25 marks)
Part B: Essay type questions: Answer any THREE questions out of FOUR (75 marks)
Total of 100 marks.


Course content
This course is concerned with the sensitivities of exchange rate determination and open-economy macroeconomics, in an attempt to explain some of the puzzles associated with determining the value of currencies.It presents a policy-oriented perspective, similar to that an economist would use when advising governments on how to work within the modern International Monetary System and how to overcome its problems.
The course covers the following topics: historical overview of the International Monetary System (Gold Standard, Interwar Years, Bretton Woods, Present System); foreign exchange markets (spot and forward exchange rates, future and options, arbitrage, parity conditions linking spot and forward exchange rates); inflation and exchange rates in the long run (Purchasing Power Parity, real exchange rates, sticky prices and the Law of One Price); exchange rate determination in an open economy (Mundell-Fleming approach, flexible-price monetary model); exchange rate systems (fixed versus flexible exchange rates,hybrid systems, currency boards);currency blocs and the European experience (economic integration and Optimal Currency Areas, the European Monetary System and the target zone, the Euro zone, adjusting to asymmetric shocks).
Teaching methods
This subject will be taught via conventional lecture-style presentations.
Expected literature
Feenstra R.C. and A.M. Taylor (2011), International Economics, 2nd edition, Worth Publishers. Chapters 13, 14, 15, 19, 20, 21
International Monetary Economics - paperback edition ISBN: 9781429269032.
 
Articles
  • Bernanke B. and K. Carey (1996), Nominal Wage Stickiness and Aggregate Supply in the Great Depression, Quarterly Journal of Economics111, 853-883.
  • Bjørnland H.C. (2009), Monetary policy and exchange rate overshooting: Dornbusch was right after all, Journal of International Economics79,64-77.
  • Burnside C., Eichenbaum M. and S. Rebelo (2007), The returns to currency speculation in emerging markets, American Economic Review97, 333-338.
  • Estevadeordal A. and A.M Taylor (2003), The rise and fall of world trade, 1870-1939, Quarterly Journal of Economics118, 359-407.
  • Kaminsky amd Reinhart (1999), The twin crises: the causes of banking andbalance-of-payments Problems, American Economic Review, 473-500.
  • Lothian J. and M. Taylor (1996), Real exchange rate behaviour: The recent float from the perspective of the past two centuries, Journal of Political Economy, 488-509.
  • López Córdova and Meissner (2003), Exchange rate regime and international trade: Evidence from the classical gold standard era, 1870-1913, American Economic Review97, 333-338.
  • Rose A. (2000), One money, one market: the effect of common currencies on trade, Economic Policy, 8-45.
Last updated on 23-04-2012