International Monetary Theory - Professor Satya Gabriel

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: sgabriel@mtholyoke.edu
Course Objectives		FAX: 413-538-2323

Course Teaching Assistant:	Armagan Gezici	e-mail: armagan@econs.umass.edu

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.

Textbook:
Daniels and VanHoose, International Monetary and Financial Economics, 1999

Grading:

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
6 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)
7	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
10 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 REJECTING EXCEPTIONALISM: REINTERPRETING THE ASIAN FINANCIAL CRISES
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
14
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:

Understand the role of the International Monetary Fund and other multi-lateral financial institutions
Understand exchange rates and the basic theories of exchange rate determination
Understand exchange rate risk and the role of securities markets in hedging such risks
Understand international currency and capital markets
Understand the role of central banks and domestic banking systems in globalization

Library of Congress Country Studies

Return to Top of Page