Course 2011-2012 a.y.

Course Objectives

The course builds on the concepts of macroeconomics in an open economy to discuss the determinants of exchange rates and the consequences of exchange rate policies for output and prices in the short and in the long run. A brief history of the international monetary system also explains the establishment of the single European currency. Basic elements of European central banking are discussed and specific issues are dealt in more depth, mainly relating to recent monetary developments including the global financial crisis.

Course Content Summary

• The balance of payments and the foreign exchange market
• A simple theory of exchange rate determination, in the short and in the long run
• Fixed exchange rates and foreign exchange intervention
• Monetary and fiscal policies with different exchange rate regimes
• From Bretton Woods to the euro: theory and experience of optimal currency areas
• Monetary institutions and strategies in the euro area
• The international financial crisis: monetary policies and financial stability
• The coming future of the international monetary system: the dollar problem; the role of the euro; the emerging importance of China’s money and finance

Detailed Description of Assessment Methods

Written exam, with midterm (50% of the grade). Midterm and second partial are not available for students who have not yet passed their exam for the previous year or years.

Textbooks

• P.Krugman-M.Obstfeld-M.Melitz, International Economics - Part II: Monetary Economics", Pearson Custom Publishing, ed. 2011