Course 2022-2023 a.y.


Department of Economics

Course taught in English
Go to class group/s: 31 - 32
CLEAM (6 credits - II sem. - OP  |  SECS-P/02) - WBB (6 credits - II sem. - OP  |  SECS-P/02) - BIEF (6 credits - II sem. - OP  |  SECS-P/02) - BIG (6 credits - II sem. - OP  |  SECS-P/02) - BEMACS (6 credits - II sem. - OP  |  SECS-P/02)
Course Director:

Classes: 31 (II sem.) - 32 (II sem.)

Suggested background knowledge

To feel at ease with this course, students are expected to be comfortable with the basics of macroeconomics and microeconomics and be familiar with mathematical tools such as exponents, logarithms and derivatives.

Mission & Content Summary


The foreign exchange market is by far the world's biggest market, making exchange rates among the most important prices. People purchasing foreign goods, firms borrowing in foreign currencies, policymakers choosing fiscal and monetary policies are influenced by changes in exchange rates. This course builds on open macroeconomics concepts to understand the exchange rate fluctuations and their role in recent economic events and policy issues.


The topics covered in class include:

  • The balance of payments and the foreign exchange market.
  • Theories of exchange rate determination in the short and long run.
  • Monetary and fiscal policies under different exchange rate regimes.
  • Optimal currency areas.
  • Monetary institutions.
  • The global financial crisis.
  • The international monetary system: the dollar dominance; the role of the euro; the Emerging Countries and the importance of China’s money and finance.

Intended Learning Outcomes (ILO)


At the end of the course student will be able to...

At the end of the course student will be able to:

  • Describe the main drivers of exchange rates in the short and long run.
  • Identify the trade-offs the policymakers face in designing exchange rate policies.
  • Explain the causes and consequences of international financial crises.
  • Summarize the roles of the major currencies in the International Monetary System. 


At the end of the course student will be able to...

At the end of the course student will be able to:

  • Independently analyze international macroeconomic issues.
  • Compare country-specific experiences depending on their choices of exchange rate policies.
  • Critically interpret articles about world financial markets from major news sources (the Economist, the Financial Times, the Wall Street Journal).
  • Evaluate policy proposals concerning the design of exchange rate policies, optimal currency areas, the international monetary system.

Teaching methods

  • Face-to-face lectures
  • Online lectures
  • Exercises (exercises, database, software etc.)
  • Individual assignments
  • Group assignments


In addition to face-to-face/online lectures, we will have individual and group take-home assignments and in-class quizzes to monitor your progress throughout the semester.

Assessment methods

  Continuous assessment Partial exams General exam
  • Written individual exam (traditional/online)
  • Individual assignment (report, exercise, presentation, project work etc.)
  • Group assignment (report, exercise, presentation, project work etc.)


You will be evaluated based on the final exam, three individual assignments, one group assignment, and two quizzes according to the following formula.


Raw Grade = 0.1 · max {I(Final ≥ 18) · Final, IA1} + 0.1 · max {I(Final ≥ 18) · Final, IA2}
                   + 0.1 · max {I(Final ≥ 18) · Final, IA3} + 0.1 · max {I(Final ≥ 18) · Final, GA}
                   + 0.6 · I(Final ≥ 18) · Final
                   + max {Quiz1 ,Quiz2},


where IA1, IA2, IA3, GA, and Final are your scores on the first, second, and third individual assignments, your group assignment, and the final exam, respectively; Quiz1 and Quiz2 are your scores for quizzes. IA1, IA2, IA3, GA, and Final are worth 30 points (maximum). Each individual and group assignment weight is 10 percent of the raw grade in the equation above. The final exam grade has to be at least 18 points to be considered towards the final grade. This is why in the equation above, we have the indicator function I(Final ≥ 18) that takes the value of one if you scored 18 points or more and zero if you scored less than 18 points. The final exam weight is 60 percent. Note that the above formula automatically makes the final exam's weight larger if your final exam score is better than your assignment scores. Quiz 1 and Quiz 2 are worth 1 point (maximum) each. There is no rounding on any intermediate computation step of the above formula. The final grade is the Raw Grade in the equation above, rounded to the nearest integer.


  • Individual assignments will allow you to review the material covered in class and apply acquired knowledge to solve various problems.
  • In a group assignment, you can choose one of several predetermined questions related to our class. These questions do not have a unique answer, and you will have to creatively apply concepts studied in our class to answer one of these questions.
  • Quizzes will take place during class. There are ten questions on each quiz, and each of the ten questions is worth 0.1 points. These quizzes will test your knowledge of the definitions introduced throughout the course.
  • The final exam will offer you three types of problems. The first will check your knowledge of definitions (similar in style to quizzes). The second set of problems will examine how well you understand the definitions and concepts by asking you a series of true/false questions. Finally, several analytic questions will require you to analyze specific scenarios, such as the effects of policy changes, or explain phenomena using our class tools.

The deadlines for individual and group assignments and the dates for the two quizzes will be announced at the beginning of the course. The assignment and quiz grades are valid for all final exam attempts.

Teaching materials


The course material consists of:

  • Textbook: P. KRUGMAN, M. OBSTFELD, M. MELITZ, International Economics, 2018, 11th edition.
  • Lecture slides.
  • Articles posted online.
Last change 19/12/2022 14:50