Loyola University Chicago

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ECON 324 / INTS 324 - International Monetary Relations

Fall

I. GENERAL INFORMATION

Instructor:      Marshall Langer

Office hours:  By appointment (convenient times: TR 2:00 – 3:30pm)

Telephone:     +39 347.1763096

Email:             mlanger11@gmail.com

Background:  Wall Street; corporate management, economic analysis, strategic planning.  Wharton MBA.

 

II. COURSE INFORMATION

1. Course Description.  In this course students assess theories of international monetary relations (often termed by economists as international finance or international macroeconomics).  Topics covered include international trade, monetary theory, international finance, foreign exchange markets, balance of payments (and trade deficits), capital mobility, government fiscal and monetary policies, international macroeconomic cooperation, economic crises, and the role of international institutions.

The course is divided into 4 distinct parts, as follows:

  • Part 1. International Macroeconomics
  • Part 2. Foreign Exchange
  • Part 3. International Trade
  • Part 4. Sovereign Risk Assessment

2. Learning Objectives.

A.    Develop accurate assessments of foreign economic environments.

B.     Craft analyses that illuminate macroeconomic realities affecting international monetary relations. 

  1. Think more critically and more strategically globally in a business and economic context. 
  1. Hone sensitivity skills required to succeed in multinational business environments.

III. LEARNING ACTIVITIES

1. Interactive class discussion.  Classes are highly interactive.  Instructor prompts students for response to questions posed and solicits his/her thoughts on issues discussed.  Format is probing and direct.  Additionally, instructor provides concrete, real-world examples to illustrate concepts.  Lecture format reinforces by example appropriate methods for asking questions, gaining relevant insights, and making appropriate recommendation. (Contributes to Learning Objectives A, B, C, D)

 

2. Presentation of textbook readings.  Textbook and other assigned readings (assigned according to the schedule in section IX of this syllabus) present relevant topics, which are covered more depthfully in class lecture.  In class discussion of readings, instructor highlights most relevant reading topics and shows by example how to present data in a stimulating way, consistent with achieving course objectives. (Contributes to Learning Objectives A, B, C)

 

3. Case Study and/or Article Presentation.  Case studies and articles are used to further illustrate real-world examples of subject topics.  For all assigned cases/articles, students should be prepared to answer questions about the case/article and be able to illustrate its subtler aspects.  For select cases/articles an individual written submission is due. For select cases/articles students will be selected to make a presentation. In class discussion of case studies/articles serves to highlight analytical methods, indicating specifically, ways to discern the most relevant focal points. (Contributes to Learning Objectives A, B, C, D)

 

4. Individual project. Each student will be assigned a different country.  The student should report to the class for 10 minutes on that country's debt, tax, fiscal, and monetary policies.  For example, the student should address such things as a) that country's % of external debt in relation to total debt and discuss why his/her assigned country targets this %, b) overall tax rate, c) federal funds interest rate, etc.  The student should indicate how these macro choices affect the overall economy of that country and region.

 

IV. ASSESSMENT

 

35%     Midterm exam

40%     Final exam

10%     Presentation of case study, article, and/or individual project

15%     Quizzes and class participation

 

1. Exams. Exams will be composed of essay questions that test your ability to apply concepts discussed through the exam date. (Measures Learning Objectives A, B, C)

2. Case/Article Analyses.  All cases/articles should be prepared for class.  For select cases/articles, where indicated, an individual written submission is due and is assigned based on the schedule in section IX of this syllabus.  Additionally, for select cases/articles students will be selected to make a presentation.  Your grade for the presentation will reflect much new insight you teach the class (rather than repeat the facts).  Use section VII of this syllabus as a further guide for all written submissions. (Measures Learning Objectives A, B, C)

3. Quizzes. Short, in-class quizzes will test your comprehension of course materials to date. (Measures Learning Objectives A, B, C)

4. Class Participation. You will be graded on the quality of, and demonstrated insight of, your in-class comments, including comments related to answers to assigned problems. (Measures Learning Objectives A, B, C, D)

5. Attendance.  Attendance is mandatory, however a student may miss up to 4 classes without penalty or explanation.  Absences of 

more than 4 must be approved by the instructor.  More than 4 unapproved absences will result in a failing grade.


V. REQUIRED COURSE READING MATERIAL

Krugman, Obstfeld, International Economics: Theory and Policy, Eighth Edition, Pearson, 2008 (Referred to as “KR” in course schedule).

Excerpts from (provided by instructor):

Madura, International Financial Management, 7th Edition, Thomson South-Western, 2003 (Referred to as “MA” in course schedule).

Hooke, Emerging Markets, A Practical Guide, Wiley, 2001 (Referred to as “EM” in course schedule).

Select articles and cases as detailed in Section VIII

 2. Course website:

 https://www.mydrive.ch/en (username is imrfa09 and password is zimrfa09)

 

VI. SUGGESTED ADDITIONAL READINGS

 1. Books.

  • Hill, Think and Grow Rich, St. Martin’s Press, 2001
  • Friedman, The World is Flat, Picador, 2007

  • Samuelson, Economics, McGraw-Hill, 2004
  • Rolfe, Monkey Business, Warner Books, 2001

 

2. Internet Sites.

http://stats.bls.gov for US Bureau of Labor Statistics

www.sec.gov for public company filings (all U.S. public plus foreign public with U.S. listings)

www.hoovers.com for summary company info, comparables search, etc.

www.statsoft.com/textbook/stathome - for straightforward explanations of statistical terms and concepts

 

3. Periodicals.

Business Week, Harvard Business Review, Sloan Management Review, The Economist

 

VII. PRESENTATION OF WRITTEN SUBMISSIONS

 

1. Layout.  1 inch margins on all sides; single spacing between lines, double spacing between paragraphs; font size 12; no name on paper; no cover page; page # in footer, on lower right on all pages except page 1.

 

2. Last 4 #’s of Social Security #.  In footer, on lower left on all pages (for any group project, separate participant’s SS#’s with a semi-colon).

 

VIII. CLASS SCHEDULE

Please note: You are not required to make a written submission unless instructed to do so where assignment is indicated below.  Reading should be completed prior to class.

 

#

 

Date

Instruction /

Activity

Topic /

Written Assignment Due (if any)

Reading Assignment

(Read for assigned class)

1

T 09/08

Introduction

Course introduction.

--

INTERNATIONAL MACROECONOMICS

2

R 09/10

Lecture

National income accounting.

KR: C12 (p288-p301)

3

F 09/11

No Class

--

--

4

T 09/15

Lecture

Balance of payments.

 

See reading at: (must copy and paste this link)

 

http://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000180032.pdf

KR: C12 (p301-p313)

5

R 09/17

Lecture

 

 

 

 

- - - - - - - - - -

Article

Deficits

 

See reading at:

 

http://www.iie.com/publications/papers/paper.cfm?ResearchID=735

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Global Flow of Funds

See website

 

 

 

 

- - - -- - - - - - - - - - - -

Handout

6

T 09/22

Lecture

Macroeconomic policy and determinants of aggregate demand.

 

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Stagflation.

KR: C16 (p420-p427)

                   (p437-p441)

- - - - - - - - - - - - - - - - -

Handout

7

R 09/24

Lecture

Macroeconomic policy and policy coordination.

KR: C16 (p441-p449)

                   (box p450)

FOREIGN EXCHANGE

8

T 09/29

Lecture

Exchange rate determination.

Relationship among inflation, money supply, interest rates, and exchange rates.

KR: C14 (p359-p365)

KR: C19 (p544-p551)

MA: C4 (p107-p118)

9

R 10/01

Lecture

Interpreting foreign exchange quotations.

MA: C3 (p69-p77)

Handout

10

F 10/02

Guest Speaker

Carmen Pasca, Economist

Topic: Social Choice

--

11

T 10/06

Lecture

Modeling foreign currency effect.

Handout

12

R 10/08

Lecture

Purchasing power parity.

KR: C15 (p384-p386)

                 (p388-p392)

                 (p394-p401)

--

T 10/13

No Class

--

--

--

R 10/15

No Class

--

--

Government Actions on Foreign Currency

13

T 10/20

Lecture

Central bank (gov’t) operations on money supply; mechanisms of fixed exchange rates.

MA: Chapter 6

KR: C17 (p462-p466)

14

R 10/22

Review

Midterm Exam review.

--

15

T 10/27

Exam

Midterm Exam.

--


 

 

#

 

Date

Instruction /

Activity

Topic /

Written Assignment Due (if any)

Reading Assignment

(Read for assigned class)

INTERNATIONAL TRADE

Trade Theory

16

R 10/29

Film

Life and Debt (Globalization and the Jamaican Economy)

--

17

T 11/03

Lecture

Comparative advantage

KR: C3 (p28-p29)

               (p36-p42)

18

R 11/05

Lecture

Comparative advantage – cont’d

KR: C3 (p42-p47)

               (p48-p51)

19

T 11/10

Lecture

Economies of scale and imperfect competition.

KR: C6 (p114-p135)

Trade Policy

20

R 11/12

Lecture

Instruments of trade policy.

KR: C8 (p182-p196)

21

F 11/13

Lecture

Charlene Barshefsky

Case #: 801422

Regional Trade

22

T 11/17

Lecture

Developing country economic crises.

KR: C22 (p621-p647)

SOVEREIGN RISK ASSESSMENT

23

R 11/19

Lecture

- - - - - - - - - -

Article

- - - - - - - - - -

Website

Country analysis.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Who Sank, or Swam, in Choppy Currents of a World Cash Ocean

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

See: www.istat.it/dati/catalogo/20070517_00/Italy2007Ing.pdf

--

- - - - - - - - - - - - - - Handout via email

- - - - - - - - - - - - - -

--

24

T 11/24

Lecture

Country risk assessment.

Measuring exposure.

MA: C16 (p476-p482)

MA: C10 (p303-p305)

                       (p311-p313)

                       (p319-p323)

--

R 11/26

No Class

--

--

Economics of Emerging Markets

25

T 12/01

Lecture

 

- - - - - - - - - -

Articles

Emerging market characteristics and specific economic issues.

 

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

EM Sovereign Debt

 

Economist articles on Russia, China, India, Venezuela

EM: C2,3 (p26-p44)

                   (p46-p54)

- - - - - - - - - - - - - -

Handouts

26

R 12/03

Lecture

Final Exam review.

--

27

W 12/09

11:30am

Exam

Final Exam.

--