International Monetary Theory (a UMass course)
Economics 321
University of Massachusetts
Spring 2001 Tuesday & Thursday 4:00-4:50 PM in AEB 119

Course Description
Dr. Satya J. Gabriel
Assoc. Professor of Economics
Course Calendar   e-mail:
Course Objectives
FAX: 413-538-2323
Course Teaching Assistant:    Armagan Gezici e-mail:

Course Description:

The course provides an overview of the history of international monetary and commercial system and a more detailed analysis of systems of fixed and floating exchange rates from theoretical and applied points of view.  Students will confront many of the key financial and monetary issues related to what is called globalization:  the growth of transnational corporate and economic relationships.  Globalization involves the expansion of markets for the inputs and outputs of corporations, extension of the production process across political boundaries to reduce political risks and costs, and expansion of research and development operations across political boundaries to tap a wider and more diverse knowledge base.  Because globalization involves transnational corporations in financial transactions in a wide range of currencies, the knowledge acquired in this course is important to understanding the dynamics of corporate finance, as well as the role of governmental and supra governmental institutions in shaping the corporate finance environment. Topics explored in the course will include hedging foreign currency risk, political risk analysis, international credits, Eurocurrency, and central bank policies.  Prerequisite:  Intermediate Macroeconomic Theory.

Daniels and VanHoose, International Monetary and Financial Economics, 1999


The course grade will be based on two midterm exams and a final exam.  The first midterm will contribute 25% to the final grade and the second midterm will contribute 35%.  The final examination will contribute 40% to the course grade.

Course calendar
Week Topic
 Unit One:  International Payments and Exchange
1 Chapter 1:  Gross Domestic Product, Price Indexes, and the Balance of Payments
U.S. Census Bureau, Foreign Trade Statistics
Gabriel, Fiscal and Monetary Policy in China: Riding the Crisis Tiger
2 Chapter 2:  The Market for Foreign Exchange
Gabriel, Mao, Money, & Foreign Exchange
3 Chapter 3:  Exchange Rate Arrangements and Systems, Past and Present
Unit Two:  International Financial Instruments, Markets, and Institutions
4 Chapter 4:  The Forward Currency Market and International Financial Arbitrage
5 Chapter 5:  Interest Yields, Interest Rate Risk, and Derivative Securities

March 15th --- Exam

Chapter 6:  A Single World Marketplace---International Financial Market Integration
Gabriel, Globalization
Morales-Gomez, Development and Social Reform in the Context of Globalization

First Midterm Examination  (during regular class meeting time)

Chapter 7:  International Banking and Payment Systems
Eichengreen, Is Greater Private Sector Burden Sharing Possible?
Unit Three:  Central Banks, Exchange Rates, and Balance of Payment Determination
8 Chapter 8:  The Role of Central Banks
Wynne, The European System of Central Banks
9 Chapter 9:  Traditional Approaches to Exchange Rate and Balance of Payments Determination

April 19th --- Exam

Chapter 10:  Monetary and Portfolio Approaches to Exchange Rate and Balance-of-Payments Determination

Second Midterm Examination (during regular class meeting time)

Unit Four:  Case Studies in Monetary Crises
11 Asian Financial Crisis:  See link to web reading below: 
Ilene Grabel's
12 Korean Crisis: 
Kim and Cho's
Korean Economic Crisis:  New Interpretation and Alternative Economic Reform
13 Asian Financial Crisis:
Wade and Veneroso's
The Asian Crisis:  The High Debt Model vs. the Wall Street-Treasury-IMF Complex

The following paper is optional:
Robert Wade's
The Asian Debt and Development Crisis of 1997-?:  Causes and Consequences

Last Class Meeting Course review.
Final exam

Learning Objectives:

In this era of so-called globalization, it is important for all of us to understand the unique economic problems generated by transnational economic relationships.  The following are learning objectives for this course:

Library of Congress Country Studies

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Copyright © 2001, Satya Gabriel, Economics Department, Mount Holyoke College.