Zahlungsbilanz und Devisenmarkt
The Balance of Payments and Financial Markets

Course Overview

In this introductory course to the core field of "Financial Markets and International Finance", students will be introduced to the monetary aspects of a country's international economic tansactions. They will get to know the meaning of important concepts like the balance of payments, the exchange rate, currency markets, international capital mobility, purchasing power parity, and interest rate parity. This will enable them to better understand and interpret recent developments in international financial markets, and understand the implications for government and business policy markets. Specifically we shall address the policy options available to governments in the present era of economic globalization, especially with respect to international currency systems (flexible vs. fixed exchange rates, currency unions).

Content: Systematic representation of all foreign transactions (international trade, international capital turnover) of an economy in the balance of payments. Relationship between these transactions and domestic investment and savings, as well as the domestic government budget deficit. Incentives for foreign exchange transactions, with special emphasis on international capital flows, interest rates and currency risk. Impact of exchange rate movements on domestic goods market and domestic employment. Balance of payments equilibrium under fixed exchange rates. Monetary and fiscal policy towards internal and external equilibrium at fixed and flexible exchange rates. Essential problems of alternative currency systems with special emphasis on the European Monetary Union.

This course page also covers the Intensifying Course:
Financial Markets and International Finance
IK Finanzmärkte und internationale Währungsbeziehungen
LVA-Nr.: 239.116

TEXTBOOK:
Paul R. Krugman and Maurice Obstfeld, International Economics: theory and policy, Pearson: Addison-Wesley, 2006.

The 6th edition is also ok.