UMBC International Finance

International Finance

Summer I 2008

Professor Kevin McIntyre

Welcome to the official UMBC International Finance homepage. Here you will find all of the ECON 482 course-related materials, including the syllabus and course outline, homework problems and answers, review sheets, and basically everything else.

With the exception of the syllabus and course outline (reproduced below), most of the materials posted here will be in .PDF form. You will need a plugin called Adobe Acrobat Reader to view and print these files. I expect that all of the university machines and most private PCs already have this program installed. If this is not the case, follow this link to the Adobe website, download and install AAR and you will be ready to go.

Course Materials

Syllabus (also reproduced below)

List of common (and not so common) FX symbols [link ]

Pakko, M. and P. Pollard. (1996). "For Here or To Go? Purchasing Power Parity and the Big Mac." FRB St. Louis Review (Jan./Feb.), 3-21. [ link ]

Big Mac PPP Index from The Economist [ link ]

Review sheet for midterm exam [link ]

Review sheet for final exam [link ]

Problem Sets & Practice Exams

Fall 2007 Exams

Quiz #1 w/ Key
Midterm Exam w/ Key
Quiz #2 w/ Key

Problem Set Keys

Problem set #1 [Balance of payments accounts]; due 3 June [KEY ]
Problem set #2 [FX markets]; due 5 June [KEY ]
Problem set #3 [Forward markets ]; due 10 June [KEY ]
Problem set #4 [Central banking ]; due 12 June [KEY ]
Problem set #5 [Joint exchange rate/BP determination]; due 17 June. [KEY ]
Problem set #6 [IS-LM-BP model ]; due 24 June. [KEY ]
Problem set #7 [Policy w/ fixed exchange rates]; due 26 June [KEY ]

International Finance Links of Interest

Additionally, most of the links on the main page are relevant to this course.

Course Description, Syllabus, Grading, etc.

This course provides a detailed investigation of foreign currency markets and international monetary economics. By the time you complete this course, you will be well versed in open-economy macroeconomics and able to understand and critically interpret associated contemporary policy debates. Topics to be covered include: balance of payments accounting, FX markets and various theories of exchange rate determination, the macroeconomic aspects of trade in goods and capital, open-economy macroeconomic policy, the international monetary system, and the role of international organizations like the World Bank and IMF.

Text: International Monetary and Financial Economics 3E, by J. Daniels and D. VanHoose. Click here to go to the Daniels and VanHoose area of the Thomson South-Western website. Additional readings/materials will be distributed in class and posted here.

Prerequisites: ECON 312 (Intermediate Macro).

Evaluation: There will be a midterm exam, a final, and problem sets. They will count towards your grade as follows:

	Scale #1	British Scale
Homework	10%	0%
Midterm	40%	0%
Final Exam	50%	100%

Consider Scale #1 the baseline. In the event of an exemplary (relatively speaking) performance on the final exam, your grade will be calculated using the “British model.” The date for the midterm is 17 June, the final 3 July. Attendance, punctuality and various subjective factors will be taken into account in marginal and not-so-marginal cases. You are required to take the midterm exam, even if you are banking on the British Scale (an extremely risky and unwise venture); failure to appear for the midterm without a prior arrangement or documented emergency will result in a summary "F'' course grade. In general, late assignments will not be accepted unless you speak to me beforehand and ask very nicely and/or have an acceptable excuse.

Attendance, etc.: I expect you to respect this course and my time by making a concerted effort to come to class punctually every session. As this is a short summer course, it is IMPERATIVE you attend every class and keep up on daily work assignments. Please understand that absences (excused or otherwise) carry significant opportunity costs; if you anticipate missing any class sessions for any reason, you should seriously reassess your enrollment in this course. We will be covering a week's worth of material every session and falling behind could be disastrous.

Course Outline & Reading List:

Lecture	Topics	Readings
27 May	Balance of Payments Accounting.	Daniels and VanHoose, Ch. 1.
29 May	FX Measurement and Markets, PPP.	Daniels and VanHoose, Ch. 2. Pakko & Pollard paper
3 June	Forward Markets. Interest Rates, Interest Rate Parity.	Daniels and VanHoose, Ch. 4; Ch. 5 to p. 153.
5 June	International Banking, Central Banks. Exchange Rate/BP Equilibrium I.	Daniels and VanHoose, Ch. 6. Review Ch. 1, Ch. 8.
10 June	Exchange Rate/BP Equilibrium I, if necessary. Exchange Rate/BoP Equilibrium II.	Daniels and VanHoose, Chs. 1, 8; Review Ch. 1, Ch. 9.
12 June	Exchange Rate/BP Equilibrium II, if necessary. Start Mundell-Fleming Model.	Daniels and VanHoose, Chs. 1, 9. Ch. 10
17 June	MIDTERM EXAM Finish Mundell-Fleming Model.	Daniels and VanHoose, Chs. 10.
19 June	Policy Under Fixed Exchange Rates.	Daniels and VanHoose, Ch. 11.
24 June	Policy Under Floating Exchange Rates.	Daniels and VanHoose, Ch. 12.
26 June	The Open-economy AS/AD Model I.	Daniels and VanHoose, Ch. 13.
1 July	Multinational Organizations and Policymaking.	Daniels and VanHoose, Chs. 14-15.
3 July	FINAL EXAM

UMBC Statement on Academic Integrity:

"By enrolling in this course, each student assumes the responsibilities of an active participant in UMBC's scholarly community in which everyone's work and behavior are held to the highest standards of honesty. Cheating, fabrication, plagiarism, and helping others to commit these acts area all forms of academic dishonesty, and they are wrong. Academic misconduct could result in disciplinary action that may include, but is not limited to, suspension or dismissal. To read the full Student Academic Conduct Policy, consult the UMBC Student Handbook, the Faculty Handbook, or the UMBC Policies section of the UMBC Directory."