Loyola University Chicago

John Felice Rome Center

ECON 324 International Monetary Relations

Spring 2016

LOYOLA UNIVERSITY

Rome Center

Economics Department

 

 

International Monetary Relations (ECON 324)

TR 2:20pm – 3:35pm

Spring 2016 Syllabus

 

I. GENERAL INFORMATION

 

Instructor:      Marshall Langer

Office hours:  By appointment (convenient times: TR 5:00 – 6:00pm)

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 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.

 

  1. Develop accurate assessments of foreign economic environments.

 

  1. 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 VIII 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)

 

IV. ASSESSMENT

 

40%     Midterm exam

45%     Final exam

5%       Presentation of case study, article

10%     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 VIII 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).  (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 reduced grade.


V. REQUIRED COURSE READING MATERIAL

 

1. Required reading:

 

Code

Title

Purchased by student:

KR

Krugman, Obstfeld, International Economics: Theory and Policy, 8th Edition, Pearson, 2008

Distributed electronically by instructor:

EM

Hooke, Emerging Markets, A Practical Guide, Wiley, 2001

IF

Madura, International Financial Management, 7th Edition, Thomson South-Western, 2003

IO

Adler, International Dimensions of Organizational Behavior, 4th Edition, Wadsworth, 1992

MG

Hill, International Business, Managing Globalization, Sage, 2009

NE

Lewicki, Litterer, Negotiation, Irwin, 1993

--

Select articles and cases as detailed in Section VIII

 

 

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

http://www-personal.umich.edu/~alandear/glossary/ - for terms

http://en.m.wikipedia.org/wiki/Fractional_reserve_banking
http://www.youtube.com/watch?v=jFnH9MCdpLo - fed operations video

 

3. Periodicals.

 

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


VIII. CLASS SCHEDULE

 

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

 

 

#

 

Date

Instruction /

Activity

Topic /

Written Assignment Due (if any)

Reading Assignment

(Read for assigned class)

1

T 01/19

Introduction

Course introduction.

--

INTERNATIONAL MACROECONOMICS

2

R 01/21

Lecture

National income accounting.

KR: C12 p288-p301

3

T 01/26

Lecture

Balance of payments.

KR: C12 p301-p308

4

R 01/28

Lecture

 

 

 

 

 

 

 

 

 

 

 

 

 

- - - - - - - - - -

Article

Deficits

 

See readings at:

 

http://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000180032.pdf (copy and paste this link)

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

Stagflation.

 

See reading at:

 

http://en.wikipedia.org/wiki/Stagflation

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

Global Flow of Funds

See websites

(articles for this class are to clarify, not tested in particular)

 

 

 

 

 

 

 

 

 

 

 - -- - - - - - - - - - - -

p3-6

5

T 02/02

Film

Milton Friedman on global economics

 

See:

http://www.youtube.com/watch?v=jOO4kPSaD4Y

--

6

R 02/04

Lecture

Macroeconomic policy and determinants of aggregate demand.

KR: C16 p420-p425                  

7

T 02/09

Lecture

Macroeconomic policy coordination.

KR: C16 p437-p441

                   box p450

 

Optional reading

KR: C14 p359-p362

(C14 optional for additional clarity on exchange rates)

8

R 02/11

Article

- - - - - - - - - -

Film

IMF/World Bank article

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

Life and Debt (Globalization and the Jamaican Economy)

Posted with class notes included

FOREIGN EXCHANGE

Currency Options

9

T 02/16

Lecture

Interpreting foreign exchange and option quotations.

 

 

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

Modeling foreign currency effect.

IF: C3 p69-p77

Excel currency cross rates handout posted

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

Currency options table (pdf)

 

Excel derivatives (futures and options)

 

Optional reading

IF: C5 excerpts

 

 

 

#

 

Date

Instruction /

Activity

Topic /

Written Assignment Due (if any)

Reading Assignment

(Read for assigned class)

Government Actions on Foreign Currency

10

R 02/18

Lecture

 

 

 

- - - - - - - - - -

Article

- - - - - - - - - -

Film

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

 

 

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

Currency crises

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

Fed Today

 

See:

 

http://www.youtube.com/watch?v=jFnH9MCdpLo

KR: C17 p462-p466

 

Optional reading

IF: Chapter 6

- - - -- -  - - - - - - - -

Posted online

Currency Interconnectedness and Foreign Exchange Quotations

11

T 02/23

Lecture

 

 

 

Exchange rate determination.

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

KR: C19 p544-p551

 

Optional reading

IF: C4 p107-p118

12

R 02/25

Lecture

Currency interconnectedness – cont’d – Germany and Japan.

--

13

T 03/01

Review

Midterm Exam review.

--

14

R 03/03

Exam

Midterm Exam.

--

--

T 03/08

No Class

--

--

--

R 03/10

No Class

--

--

INTERNATIONAL TRADE

15

T 03/15

Lecture

International negotiations.

NE: Negotiations

IO: Int’l negotiations

MG: Int’l negotiations

Trade Theory

16

R 03/17

Lecture

Comparative advantage

KR: C3 p28-p29, p36-p42

17

T 03/22

Lecture

- - - - - - - - - -

Film

Comparative advantage – cont’d

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

EU history

KR: C3 p42-p47, p48-p51

Trade Policy

18

R 03/24

Lecture

Instruments of trade policy.

KR: C8 p182-p196

 

Optional reading

IF: C19 (posted with class notes included)

19

T 03/29

Lecture

Purchasing power parity.

See specifically chart p397.

 

Interest rate parity.

 

See:

 

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

KR: C15 p384-p386

                 p394-p401

                  

                    p388-p389

 

Regional Trade

20

R 03/31

Case study

Charlene Barshefsky

p1, 5-11

21

T 04/05

Film

International economics film.

--

 

 

 

#

 

Date

Instruction /

Activity

Topic /

Written Assignment Due (if any)

Reading Assignment

(Read for assigned class)

SOVEREIGN RISK ASSESSMENT

Economics of Emerging Markets and EM Crises

22

R 04/07

Lecture

 

 

 

 

- - - - - - - - - -

Film Clip

Developing country economic crises.

 

 

 

Emerging market characteristics/specific economic issues (optional)

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

Jeffrey Sachs in Bolivia:

http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/vid_jeffreysachs.html

KR: C22 p625-p637

                 Table 22.2

             

Optional reading

EM: C2,3 p26-p44

                 p46-p54

23

T 04/12

Lecture

Developing country economic crises – cont’d.

KR: C22 p637-p646

Country analysis

24

R 04/14

Lecture

 

 

 

 

 

 

 

 

- - - - - - - - - -

Articles

Country risk assessment.

Measuring exposure.

 

ISTAT Italy statistics

 

 

 

 

 

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

EM Sovereign Debt (through section 2.1)

See also Nigeria $ denominated bond (page 1 of prospectus)

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

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

IF: C16 p476-p482

 

 

Posted online

 

Optional reading

IF: C10 p303-p305

                   p311-p313

             p319-p323

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

See article

See posted online

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

Optional reading

25

T 04/19

Excel

Econometric forecasting

Optional readings

Excel basics 1 & 2

26

R 04/21

Lecture

Final Exam review.

--

27

TBD

Exam

Final Exam.

--

 

EOC problems

 

Suggested end of chapter problems - you are not required to submit answers to these questions.  They are intended to help clarify the concepts.  Answers are posted online. (Bolded may be used in class).

 

KR book

KR-C12 – 2 (national income accounting), 3, 5, 8, 9 (BOP)

KR-C16 – 3, 5, 6, extra: 14, 16

KR-C17 – 3, 5, 9, 13, 16, 20 (last ones good for non fx part of bs)

KR-C19 – 3, 4, 7, 8, 12
KR-C3 – 4, 6, 7, 8

KR-C8 – 3, 5, 7, 8, 10

KR-C15 – 1, 3, 13, 14, 15 (on nominal and real interest rates)

KR-C22 – 3–8, 11, 12

 

IF book

IF-C3 – 3-7, 3-17

IF-C16 – 16-9, 16-12