International Macroeconomics and Finance for Emerging Markets
Full course descriptionThis course focuses on short-term economic fluctuations specific to emerging economies, which tend to have sharper run-ups in asset prices in boom times, but more severe crises when things go bad, be it in currencies, banking, or sovereign debt. The course provides insights in the indicators and yardsticks of risk and volatility in emerging markets, and policy and financial solutions to address them.
International macroeconomics concern the role of flows of capital, goods and people on macroeconomic performance. Yet, emerging economies’ macroeconomic experience differs from developed countries’, in particular they have been much more unstable and prone to crises (Montiel, 2011). Understanding the macroeconomic dynamics in emerging countries not only requires to focus on a specific set of issues, such as the role of financial liberalization, exchange rate determination and domestic capital reform, but also to reconsider the economic mechanisms at the source of business fluctuations (Aguiar and Gopinath 2011).
International finance builds on these issues. The business and financial fluctuations resulting from these macroeconomic fundamentals are fundamentally different in emerging markets relative to developed economies. A deep understanding of these risks is essential to business success in an emerging markets environment. Moreover, this understanding needs to be amended with knowledge of the working of instruments helping to manage these risks.
This course will combine the perspectives from Economics and Finance on these issues.
Course objectives* Critically analyse the theoretical sources of business fluctuations in emerging economies
* Examine fundamental issues in international finance both from an economics (role of interest and exchange rates, policy choices) and a business perspective (perspective of companies operating in a multi-country environment)
* Identify and interpret selected indicators of macroeconomic and financial performance
* Identify and interpret indicators of risk and volatility in order to assess macroeconomic and financial vulnerabilities and early warning systems for crises
* Know and understand instruments helping to manage these risks
PrerequisitesExchange students need to have obtained a Bachelor degree in Business or Economics. Students are expected to understand the key basic concepts from macroeconomics and finance, as is taught in typical bachelor business and economics programs. Analytical skills, understanding of excel, and an advanced level of English are required.
Recommended reading* P.J. Montiel (2011), Macroeconomics in Emerging Markets, Second edition, Cambridge University Press.
* K.C. Butler (2016), Multinational Finance, Sixth edition, Wiley.