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International Finance (E-731/EFN-721/BE754)

  • Instructor Name: Dr Haider Ali & Dr Uzma Zia

Prerequisites For this Course:

None

Text Book(s):

  • International Finance, An Analytical Approach, Imad A. Moosa
  • International Finance, Keith Pilbeam
  • International Financial Management, Jeff Madura, 8th Edition

Reference Book(s):

  • Handbook of International Economics, International Macroeconomics, Volume 6, Pages, 1-340 (2022), Edited by Gita Gopinath, Elhanan Helpman and Kenneth Rogoff.
  • International Trade Theory & Policy, P.R. Krugman, M. Obstfeld, and Marc Melitz: Global Edition

Course Description

This course will be based on theory, major issues, and practical aspects of international macroeconomics. The balance of payment accounts, the foreign exchange market, and international capital mobility are the fundamentals of this course. Policy issues will be discussed related to excessive
global trade and financial imbalances, sovereign debt crises, international financial crises, exchange rate regimes, and the evolving international monetary system. Flipped classroom approach will be used.

Course Objectives

This course aims to equip students with the analytical tools and theoretical foundations needed to understand the financial management, role of exchange rates and the balance of payments in an open economy. It prepares students to critically examine international financial policies and their macroeconomic inferences while developing a knowledge of major financial events and  historical issues. By the end of the course, students will be able to analyze complex international financial dynamics and will be able to contribute effectively to academic and policy debates.

Learning Outcomes

The course will enable students to :

  • Analyze the dynamics of exchange rates and balance of payments in open economies.
  • Evaluate the impact of international financial policies on macroeconomic stability and growth.
  • Interpret and critically assess major international financial events and policy responses.

Lecture Plan

Session Topic Readings Activities Instructor
Module # 1: ( Where applicable) Title:

A course may have 3-4 modules.
1-2 Orientation of the course

 

Historical events in international Finance to modern era (Gold Standard, Breton woods, currency crisis, Modern digital currency , crypto currency)

 Understanding the structure of course and course outline Course outline, Books details will be shared with students Dr Haider/Dr Uzma
3-4 Multinational Financial Management -An overview

 

 

International Financial Markets

·         Global Financial system and corporations

  • International Bond market
  • International stock market
  • International Credit market

 

 ·         International Financial Management, Jeff Madura, 8th Edition, (Chapter 1,3) Additional research papers/articles and on spot readings can be given. Guest Lecture

 

 
5-6 Exchange Rate Behavior and market integration

 

Exchange rate  regimes & complexities.

Fixed, floating, and managed float regimes, Currency boards and dollarization, IMF classification of exchange rate arrangements

 ·         International Financial Management, Jeff Madura, 8th Edition (6)

 

 do Dr Uzma Zia
7-8 Relationship inflation, Interest rates and exchange rates

 

Purchasing Power Parity

 

Global financial crisis/ Real World Examples

 

Currency Unions

 

 ·         International Financial Management, Jeff Madura, 8th Edition

 

 do Dr Uzma Zia
9-10  

The balance-of-payments accounts & Global imbalances

 

BOP and policy interlinkages

 

 ·         International Trade Theory & Policy, P.R. Krugman, M. Obstfeld, and Marc Melitz: Global Edition

 

 do Dr Haider Ali
11-12 International Flow of Funds:

Current Account & its Determination

 

Capital Account

Twin Deficit

 ·         International Trade Theory & Policy, P.R. Krugman, M. Obstfeld, and Marc Melitz: Global Edition

·         International Trade Theory & Policy, p.r. Krugman, m. obstfeld, and marc melitz: Global Edition

 

 do Dr Haider Ali
13-14 External Balance and External adjustments- Open economies/ Country risk Analysis

 

Financial risks management

  • Exchange rate risk
  • Interest rate risk
  • Hedging
  • Derivative market

 

 ·         International Financial Management, Jeff Madura, 8th Edition (chapter 16)

 

 

 do Dr Uzma Zia

 

&

 

Dr Haider Ali
15-16 Project Presentations   Students final presentations followed with discussion  
 

Projects will be assigned

  1. Twin Deficits”: fiscal deficits and current account imbalances (2-3 country cases)
  2. Exchange Rate Regimes (Pros and cons and indepth study- comparisons)
  3. International Monetary System (understanding of the system with examples)
  4. Why financial crisis occur? (reasons, shocks occurred, impact on macro economy and international trade- country cases)

 

Note: Key research articles and important handouts will be provided by the instructors. Students will come prepared in next class for discussions

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