HS 484 : International Finance and Monetary Systems

Open economy macroeconomics and balance of payments, components of balance of payments, disequilibrium in balance of payments, and the need for adjustment and/or financing.  Approaches to balance of payment adjustment: Monetary, Income.

Elasticities and absorption approaches.  Exchange rate as an instrument of adjustment.  Basic exchange rate concepts: spot vs. forward; real vs. nominal; fixed vs. flexible.  Models of exchange rate determination; current account vs. capital account models.

A historic perspective of International Monetary systems of the post-world war era; Bretton Woods system and the Managed Floating regime.  Exchange Rate arrangements, supply of reserve assets, adjustment mechanisms in these systems.  Relative roles of gold, national and supranational currencies (Special Drawing Rights and European Currency Unit) in the provision of international liquidity.

Provision of short run and long run (development) finance by international agencies.  The role of International Monetary Fund (IMF), and World bank and other institutions in providing financial assistance to LDCs.  Petrodollars and their recycling.  Eurocurrency system.  The third world and debt trap.

Texts/References

A. Crockett, International Money: Issues and Analysis, ELBS & Nelson, 1982.

P. Hallwood, and R. MacDonald, International Money: Theory, Evidence and Institutions, Basil Blackwell, 1986.

M.Levi, International Finance, 2nd Edition, Tata McGraw-Hill, 1990.

F.L. Rivera-Batiz and L. Rivera-Batiz,  International Finance and Open Economy Macroeconomics, Macmillan Pub.Co., 1985.