International Monetary Theory

International Monetary Theory
Monetary and macroeconomic aspects of international relations dealing primarily with short-run balance-of-payments disequilibrium and adjustments.
 Hours3.0 Credit, 3.0 Lecture, 0.0 Lab
 PrerequisitesECON 381 & ECON 388; or ECON 380 & ECON 381 & POLI 328
 ProgramsContaining ECON 459
Course Outcomes

Econ 459 students will be able to

  1. Demonstrate a familiarity with the key issues in two broad fields:

International Finance, particularly exchange rate behavior,

Open Economy Macroeconomics.

  1. Discuss the nature of the foreign exchange market, including:

It's market organization

The role of vehicle currencies

The instruments traded

The role of arbitrage.

  1. Understand and use models of exchange rate behavior:

Covered and uncovered interest rate parity

Long-run monetary and equilibrium models.

  1. Understand financial portfolio theory to the extent that it is useful in explaining exchange rate behavior, including:

The determination of risk premia

How it may explain the "forward bias" puzzle.

  1. Discuss the history of the international financial system since the late 1700's.
  2. Discuss the international aspects of the national income and product accounts, along with the balance of payments accounts.
  3. Apply simple dynamic models of consumption smoothing to the current account.