Zahlungsbilanz und Devisenmarkt :
Finanzmärkte und Internationale Währungsbeziehungen:
Lecturer: Univ Prof Dr Joseph Francois.
Readings and notes Lecture notes and readings are posted below
Zahlungsbilanz und Devisenmarkt (KS)
Balance of payments and foreign exchange markets (KS)
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Financial markets and international monetary relations (IK)
Finanzmärkte und Internationale Währungsbeziehungen (IK)
MIDTERM REVIEW QUESTIONS <== LINK to questions. This includes example questions based on problem sets.
- Introduction slides
- (1) Interest parity conditions
- (2) Purchasing Power Parity
- The MIDTERM on 6 May will cover units (1) and (2) above. It will be a mix of mutiple choice and short answers.
REVIEW QUESTIONS have been posted. You should also be familiar with Krugman and Obstfeld Chapters 12,13,14,15.
- (3) Real Exchange Rates and linkages between trade and capital accounts
- (4) PROBLEM SET on Trade and the Real Exchange Rate using the 123 model.
INSTRUCTIONS: YOU CAN either turn in the problem set next week 17 June, or leave it with my secretary or in my mail box in room K120B.
- FINAL EXAM review guidelines
- KRUGMAN AND OBSTFELD: chapters 16,17,19,20
- NOTES
- REVIEW QUESTIONS for the final exam
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Course Overview
Lectures (KS): This an introductory course to the core field of "Balance of Payments and Foreign Exchange Markets." Students will be introduced to the monetary aspects of a country's international economic tansactions. They will get to know the meaning of important concepts like the balance of payments, the exchange rate, currency markets, international capital mobility, purchasing power parity, and interest rate parity. This will enable them to better understand and interpret recent developments in international financial markets, and understand the implications for government and business policy markets. Specifically we shall address the policy options available to governments in the present era of economic globalization, especially with respect to international currency systems (flexible vs. fixed exchange rates, currency unions).
Intensification class (IK): The IK class involves applied problem sets and lectures on more advanced topics. This includes calculation of purchasing-power parity-adjusted exchange rates, applied modeling using Excel-based models, and more application of the analytical models developed in the lectures. If you plan to take the IK class, you should take it at the same time as the lectures, or afterwards.
Content: Systematic representation of all foreign transactions (international trade, international capital turnover) of an economy in the balance of payments. Relationship between these transactions and domestic investment and savings, as well as the domestic government budget deficit. Incentives for foreign exchange transactions, with special emphasis on international capital flows, interest rates and currency risk. Impact of exchange rate movements on domestic goods market and domestic employment. Balance of payments equilibrium under fixed exchange rates. Monetary and fiscal policy towards internal and external equilibrium at fixed and flexible exchange rates. Essential problems of alternative currency systems with special emphasis on the European Monetary Union.
TEXTBOOK:
Paul Krugman and Maurice Obstfeld, International Economics: Theory and Policy, 8th edition (2008).
Note that 7th edition can also be used. Links to both editions on Amazon.de are provided below. 
Grading
Grading for the lecture section (239110KS) will be based on
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midterm examination (45%)
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final examination (45%)
- participation and attendance (10%).
TOTAL: 100%
minimum passing grade is 51%.
Grading for the lecture section (239116KS) will be based on
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midterm examination (40%)
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final examination (40%)
- homeworks and participation in class exercises (20%).
TOTAL: 100%
minimum passing grade is 51%.