Fortgeschrittene Wechselkurstheorie
Advanced Exchange Rate Theory

Course Overview

Subject and level: This is an MSc level course on exchange rate economics, with a focus on theoretical concerns and the
mapping of this theory to recent empirical evidence.
Grading: Grading will be based on a mid-term exam (45%), a final exam (45%), and class participation (10%).
Readings and slides: The syllabus, course readings, and lectures slides will be posted on the course page:
http:www.i4ide.org/students/courses/239130KS.htm
In-class Problem Sets: We will be doing problem sets in class as review questions. They will be posted on the course page. You do not need to turn them in but studying them will help with the exams.
Warning: This is a very math intensive class (read dynamic optimization, differential equations, etc). You should have taken the class Zahlungsbilanz und Devisenmarkt, or its equivalent, as well as some advanced macroeconomic and microeconomic theory.

READINGS:

(1) Foundations of International Macroeconomics, by Maurice Obstfeld and Kenneth S. Rogoff, The MIT Press (September 12, 1996). ISBN-10: 0262150476, ISBN-13: 978-0262150477. Selected chapters (4,8,9,10).

(2) "World Economy - Interest Rate Parity 1," Menzie Chinn, written for the Princeton Encyclopedia of the World Economy, 2007.

(3) "Expectations and Exchange Rate Dynamics," Rudiger Dornbusch, Journal of
Political Economy 84 (1976): 1161-76.

(4) "The new open economy macroeconomics: a survey," Philip R. Lane, Journal of International Economics 54 (2001): 235 – 266.

(5) "The Purchasing Power Parity Debate," Alan M. Taylor; Mark P. Taylor, The Journal of Economic Perspectives, Vol. 18, No. 4. (Autumn, 2004), pp. 135-158.

(6) "The (partial) rehabilitation of interest rate parity in the floating rate era: Longer horizons, alternative expectations, and emerging markets," Menzie D. Chinn, Journal of International Money and Finance 25 (2006) 7-21.

(7) "A corporate balance-sheet approach to currency crises," Philippe Aghion, Philippe Bacchetta, and Abhijit Banerjeed, Journal of Economic Theory 119 (2004) 6–30.

(8) "Exchange Rate Models Are Not as Bad as You Think," Charles Engel, Nelson C. Mark, and Kenneth D. West, IMF working paper 2007.