International Finance & Monetary Theory

Prerequisites: SIPA U6401 Registration restricted to IFEP students This is a methods course meant to provide students with the analytic tools necessary to think through real life international economic policy situations. The class is primarily meant for those interested in working at international financial institutions, the foreign-service, Wall Street, or the financial press. Lectures will, in part, be fairly rigorous though, if the student has taken first year economics, knows basic algebra, and (most importantly) can navigate graphs, he/she will be able to handle the material fairly easily. While theory will at times dominate, its policy relevance will be illustrated through i) l0-minute discussions at the beginning of every class on topical issues; ii) continuous references to recent economic/market episodes meant to illustrate the theoretical material; iii) reading short pieces of Wall Street research that cover timely market topics; and iv) the term paper that will be graded on how well theory and policy are integrated. In terms of topics, the first half of the semester will develop an analytic framework that thinks though the concept of the exchange rate in terms of its (short and long term) determinants as well as the interaction between the exchange rate and macro variables such as growth, inflation, and monetary policy. The second half of the semester we will investigate individual themes including exchange rate regimes; BoP crises and contagion; global imbalances and the savings glut; the role of FX in inflation targeting regimes; and capital markets and emerging markets finance.