Course title: International finance Code: NMG_NT127K4 Credits: 3

Átírás

1 Course title: International finance Code: NMG_NT127K4 Credits: 3 Course type: 3 hours of lecture per week Assessment: exam Scheduled in: first semester Frequency: annual, in the first semester Language: English Prerequisites: -- Course description Objectives: In the world economy, trade in financial instruments is a multiple of trade in goods and services. International finance has an impact both on the global economy and small and open economies, such as the Hungarian economy having an overview of the international financial mechanisms is part of the basic schooling in economics. During the course, the questions of international finance are discussed with a macroeconomic stance of open economies, linking international financial institutions, financial instruments and macroeconomic variables. Besides transferring basic theoretical knowledge, the course also lays emphasis on discussing issues of practical relevance, which are demonstrated with the help of global and Hungarian cases. Competences to emerge / develop: Professional knowledge: Understanding the balance of payments logic, thinking in models with regard to exchange rates, interest rates and financial risks. Understanding the development of the financial system. Capabilities: Orientation in international financial problems through understanding the basic working mechanisms of the international financial system. Attitudes: Awareness and problem sensitivity in the area of international finance. Autonomy and responsibility: Recognition of basic financial risks and drawing conclusions. The course builds on knowledge acquired in the finance, corporate finance, macroeconomics and economic policy courses. Contents and schedule: The main building blocks are: 1. International trade in goods and financial instruments, 2. International financial instruments, financial markets and institutions, 3. The exchange rate and the balance of payments, 4. Open economy macroeconomics The weekly schedule is provided below Sept 2017 Week Topic LECTURE: Course requirements. Trade flows, capital flows, and the balance of payments Globalisation and integration of the world economy. Flows of goods and capital. Parts of the balance of payments. The current and the capital account. REQUIRED READING: Chapter 1 in Daniels and van Hoose (2014) Lőrincné Istvánffy, H. (2004): A külgazdasági ügyletek makrogazdasági összefüggései. In: Lőrincné Istvánffy, H. (2004): Nemzetközi pénzügyek. Aula, Budapest, o. 1

2 LECTURE: The market for foreign exchange Bilateral exchange rates. Foreign exchange arbitrage. The demand for and supply of currencies. Effective and real exchange rates. Purchasing power parity Sept 2017 REQUIRED READING: Chapter 2 in Daniels and van Hoose (2014) Losoncz, M. (2006): Alapfogalmak: devizapiac, árfolyam, piaci szereplők. In: Losoncz, M. (2006): Nemzetközi pénzügyek. Széchenyi István Egyetem, Győr, 9-22.o. LECTURE: Exchange-rate systems, past to present Exchange-rate systems. The gold standard. The Bretton Woods system. Fixed and flexible exchange rates Sept 2017 REQUIRED READING: Chapter 3 in Daniels and van Hoose (2014) Lőrincné Istvánffy, H. (2004): Árfolyamrendszerek. In: Lőrincné Istvánffy, H. (2004): Nemzetközi pénzügyek. Aula, Budapest, o. LECTURE: The forward currency market and international financial arbitrage Foreign exchange risk. The forward currency market. Covered and uncovered interest parity. 2-6 Oct 2017 REQUIRED READING: Chapter 4 in Daniels and van Hoose (2014) Losoncz, M. (2006): Devizapiaci kockázatok és kitettség. In: Losoncz, M. (2006): Nemzetközi pénzügyek. Széchenyi István Egyetem, Győr, o. Farkas, P. (2011): Eszközárak és a fedezetlen kamatparitás. In: Farkas, P. (2011): Haladó nemzetközi pénzügyek. Széchenyi István Egyetem, Győr o. LECTURE: Interest yields, interest rate risk, and derivative securities 9-13 Oct 2017 The different interest yields between countries and the interest parity condition. Real interest rates and real interest parity. Hedging, speculations and derivatives. REQUIRED READING: Chapter 5 in Daniels and van Hoose (2014) LECTURE: International banking, central banks, and supranational financial policymaking institutions Oct 2017 International financial intermediation. International money flows, and financial system risks. Financial regulation and central banks. Supranational financial institutions. REQUIRED READING: Chapter 6 in Daniels and van Hoose (2014) 2

3 LECTURE: The international financial architecture and emerging economies Foreign direct investments. Capital market liberalisation and international financial crises. Exchange rate regimes and crises Oct 2017 REQUIRED READING: Chapter 7 in Daniels and van Hoose (2014) 30 Oct 3 Nov 2017 AUTUMN BREAK Lőrincné Istvánffy, H. (2004): A globalizáció hatása a nemzetközi tőkeforgalomra. In: Lőrincné Istvánffy, H. (2004): Nemzetközi pénzügyek. Aula, Budapest, o. LECTURE: Traditional approaches to balance-of-payments and exchange-rate determination 6-10 Nov 2017 Export, import and the supply of and demand for currencies. Elasticities and absorption approaches to balance of payments determinations. REQUIRED READING: Chapter 8 in Daniels and van Hoose (2014) Farkas, P. (2011): A fizetési mérleg rugalmassági, abszorpciós és monetáris megközelítése. In: Farkas, P. (2011): Haladó nemzetközi pénzügyek. Széchenyi István Egyetem, Győr o. LECTURE: Monetary and portfolio approaches to balance-of-payments and exchange-rate determination Nov 2017 Assets and liabilities of central banks. Intervention on the foreign exchange markets. Monetary and portfolio approaches to the balance of payments and the exchange rate. REQUIRED READING: Chapter 9 in Daniels and van Hoose (2014) Farkas, P. (2011): A fizetési mérleg rugalmassági, abszorpciós és monetáris megközelítése. In: Farkas, P. (2011): Haladó nemzetközi pénzügyek. Széchenyi István Egyetem, Győr o. LECTURE: The open economy Economic performance and price indices. Macro-income and the IS curve. Equilibrium on the real money markets and the LM curve. The BP curve and the IS-LM model Nov 2017 REQUIRED READING: Chapter 10 in Daniels and van Hoose (2014) Bod P. Á. (2006): Bevezetés a gazdaságpolitikába. Aula, 2006, 4. fejezet Tánczos T. makroökonómia előadásai 3

4 LECTURE: Economic policy with fixed and flexible exchange rates The role of capital mobility. Fixed and flexible exchange rates and different capital mobility curves. 27 Nov 1 Dec 2017 REQUIRED READING: Chapters in Daniels and van Hoose (2014) Veress, J. (2003): Stabilizációs politika nyitott gazdaságban. In: Veress, J. (2003): Gazdaságpolitika. Aula, Budapest, o. LECTURE: The price level, real output, and economic policymaking 4-8 Dec 2017 Aggregate demand and supply. Discretionary economic policy intervention measures. REQUIRED READING: Chapter 13 in Daniels and van Hoose (2014) LECTURE: Domestic economic policymaking in a global economy Dec 2017 Internal and external balance. Exchange-rate responses to policy actions with sticky wages and prices. Economic policy consequences of openness and inflation. REQUIRED READING: Chapter 14 in Daniels and van Hoose (2014) Course room and equipment: The lectures are held in room 119 (B Building), Wednesday, 11:50 am - 2:25 pm. Paper, pen and calculator are needed. Assessment: Written and oral exam, as quantified below: 1. Written exam (50% weight): Test-type questions (other than multiple choice, including descriptive and logic exercises etc.) and financial calculations (such as cross-exchange rates, interest rate parity, purchasing power parity etc.). The weekly lectures specify the scope and type of exercises to be performed in the frame of the written test. Under 60% the written exam is assessed as a fail (pass from 60%, moderate from 70%, good from 80% and excellent from 90%). Students have to attain at least a pass for the written exam before eligibility for the oral exam. 2. Oral exam (50% weight): Drawing a topic and providing a detailed description / account of the issue while also answering questions, which are based on the lectures, the slides, and the reading material. Assessment as fail (1), pass (2), moderate (3), good (4) and excellent (5). The oral exam starts upon entering the classroom. Two list of topics to be drawn from will be provided. The list of grand topics (13-15 should be expected) focus on complex problems of 4

5 international finance and the oral exam is concentrated mostly on these. The list of small topics (25-30 should be expected) focus on smaller pieces of knowledge and the questions therein can be answered in short time. The list of small topics is used only when the final student grade cannot be decided unambiguously (see below). Repeating the oral exam and improvement of the final grade is possible in accordance with the prevailing university regulation. 3. Final student performance and grade = arithmetic average of the written and oral exam marks (but the assesment must be at least a pass in both exams). If the averege is not an integer, a question is drawn from the small list, and the answer will be used to assess for the higher or the lower grade. Required reading: Daniels, J. and Van Hoose, D. (2014): International Monetary & Financial Economics: International Edition. Pearson. 552 o. ISBN-13: The required reading is specified with the topics above (the book is available in the library). For convenience, additional voluntary Hungarian language reading is also provided (part of which is available on the web). Additional reading: Farkas, P. (2011): Haladó nemzetközi pénzügyek. Széchenyi István Egyetem, Győr. Az árfolyam meghatározásának elméleteihez. Krugman, P.R. és Obstfeld, M. (2009): Nemzetközi gazdaságtan. Elmélet és gazdaságpolitika. Panem, Budapest, ISBN: A nemzetközi pénzügyek makro-közgadaságtani alapjai. Losoncz, M. (2006): Nemzetközi pénzügyek. Széchenyi István Egyetem, Győr, 204 o. Elsősorban a devizapiacok működésének megértéséhez. Vígvári, A. (2011): Pénzügy(rendszer)tan. Akadémiai Kiadó, Budapest. 470 o. ISBN: Digital education material: The lecture slides will be available here: The passwords for extraction will be provided by the lecturer. The lectures (slides), the required reading and the computations are part of the assessment as above. Reading and practice is advised in the order specified above. Person in charge of the major: Edit Erdélyi Ph.D., associate professor, Institute for Economic Sciences, Department of Business Economics, erdelyi.edit@uni-eszterhazy.hu Person in charge of the course: Balázs Borsi Ph.D., associate professor, Institute for Economic Sciences, Department of Business Economics, borsi.balazs@uni-eszterhazy.hu Instructor other than the person in charge of the course: -- Availability of and consultation with the lecturer: Available on Wednesdays 7:30-8:00 and 14:30-15:30 in room B/224 (prior arrangement in is advised). If agreed in , consultation is possible at other times as well. address: borsi.balazs@uni-eszterhazy.hu Accessibility preferred by the lecturer: borsi.balazs@uni-eszterhazy.hu Group online consultation: communication via the Neptun list. 5