- Semester: IV
- Number of Credits: 4
Preamble
This elective course, to be offered in the fourth semester, requires a good understanding of Macroeconomics. This course aims at providing a theoretical exposition of different aspects of international finance and financial institutions in the context of globalization. Good understanding of International Trade and Trade Policies is desirable.
Module 1: Foreign Exchange Rates and Markets (12 Lectures)
Foreign Exchange Rates: Fixed, Flexible, Nominal, Real and Effective Exchange Rates, Purchasing Power Parity and Interest Parity. Foreign Exchange Markets: Spot, Forward, Futures and Options Currency Markets. Foreign Exchange Risk and Exposure: Exposure, Risk and Parity Relationship, Accounting Exposure versus Real Exposure, Operating Exposure, Hedging Risk and Exposure.
Module 2: Balance of Payments (12 Lectures)
Balance of Payments: Current Account Balance and Capital Account Balance, Official Reserve Transactions, Relationship between Balance of Payments and National Income Accounts. Approaches to Balance of Payments Adjustments: Elasticity, Absorption, Monetary and Portfolio-balance Approaches.
Module 3: International Investment and Financing (12 Lectures)
Cash Management: Investment and Borrowing Criterion with Transaction Costs- International Dimensions of Cash Management. Portfolio Investment: International Capital Asset Pricing- Settlement of International Portfolio Investments. Capital Budgeting for Foreign Investments: Project Selection, Cash Flows, Discount Rates, Growth and Concerns About Multinationals. International Financing: Equity Financing, Bond financing, Bank financing.
Module 4: International Financial Institutions (12 Lectures)
Gold Standard and Gold Exchange Standard: International Monetary Fund- International Reserves-Special Drawing Rights. Theory of Optimum Currency Areas: International Policy Co-ordination, Currency Board, International Financial and Currency Crisis. International Debt: Measures of Indebtedness-International Debt Crisis.
References
1. |
Kenen Peter B. (2000), The International Economy, Cambridge University Press, New York. Chapters: 12, |
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13, 14, 15, 16, 17,18 and 19. (Modules 2 and 4). |
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2. |
Krugman P. R. and Obstfeld M. (2000), International Economics-Theory and Policy, Addison-Wesley, |
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Delhi. Chapters: 12, 15, 16, 20 and 22. (Modules 2 and 4). |
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3. |
Levi Maurice D. (2005), International Finance, Routledge, New York. Chapters: 2, 3, 4, and 9 to 18. |
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(Modules 1, 2 and 3). |
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4. |
Pilbeam Keith (1998), International Finance, Palgrave, New York. Chapters: 14 and 15. (Module 4). |
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5. |
Salvatore Dominick (2002), International Economics, John Wiley and Sons, Singapore. Chapter: 14. |
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(Module 1). |
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6. |
Sodersten Bo and Reed Geoffrey (1994), International Economics, Macmillan, London. Chapters: 23, 25, |
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30 and 31). (Modules 2 and 4). |
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7. |
Ugur Mehmet (2002), (Edited), An Open Economy Macroeconomics Reader, Routledge, London. Chapters: |
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16, 17, 19, 20, 21 and 22. (Modules 2 and 4). |
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