This is a one semester module that is suitable for students doing a Master’s programme in Finance/Economics or related disciplines. It also provides the grounding for a more advanced module International Finance 2 (FNCE 9008). It involves developing and analysing macroeconomic models (both Classical and Keynesian) that place the exchange rate within the overall context of macroeconomic policies and objectives. Each model involves the use of mathematics and diagrams both to explain the model and analyse the impact of external changes on the model. This module also involves analysis of some of the journal articles in relation to the models.
Basic International Finance.
The nature of the FX market.
Interaction of Hedgers, Arbitrageurs and Speculators.
Explanation of the Balance of Payments and its sub-accounts.
Elasticity and Absorption approaches to the Balance of Payments.
Purchasing Power Parity Theory and the Law of One Price.
Analysis of Covered and Uncovered Interest Rate Parity.
The Classical Model in the Long Run.
Analysis of the basic equations and diagrams of the Classical model. Application of the model to the closed economy, the small open economy and the large open economy. The loanable funds market, the net capital outflow and the foreign exchange market. Case studies on changes in exogenous variables e.g. in fiscal policy and in monetary policy.
There is an emphasis on “learning by doing” i.e. the Socratic method in this module. Students are asked questions during lectures and are “encouraged” to participate. Each topic involves significant “block building” and students are required in lectures to show both an understanding of the material developed in previous lectures and a capacity to apply this material in the further development of the topic. Students are also given problems to solve between lectures and then the students and lecturer jointly develop solutions in subsequent lectures. Part of the practical application of the theory will take the form of self-directed learning. Each student is required to submit an individual project on a topic from the module that has been agreed and refined with the lecturer.
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Other Assessment(s) | 100 |