ECON 3510 - International Finance III

North Terrace Campus - Semester 1 - 2014

This course deals with the analysis of two important and related macroeconomics issues in open economies: the exchange rate and the capital flows. The objectives of the course are two-fold: to introduce the main concepts, principles and models in the theory and empirical works in those two key areas of International Finance; to apply analytical tools to understand the relevant policy issues in the global markets. Based on additional reading materials, discussions on relevant current events from various parts of the globe will be carried out.

  • General Course Information
    Course Details
    Course Code ECON 3510
    Course International Finance III
    Coordinating Unit School of Economics
    Term Semester 1
    Level Undergraduate
    Location/s North Terrace Campus
    Units 3
    Contact Up to 3 hours per week
    Prerequisites ECON 2506 & ECON 2507
    Incompatible ECON 3032
    Course Description This course deals with the analysis of two important and related macroeconomics issues in open economies: the exchange rate and the capital flows. The objectives of the course are two-fold: to introduce the main concepts, principles and models in the theory and empirical works in those two key areas of International Finance; to apply analytical tools to understand the relevant policy issues in the global markets. Based on additional reading materials, discussions on relevant current events from various parts of the globe will be carried out.
    Course Staff

    Course Coordinator: Dr Raul Barreto

    Office location: Nexus 10, Level 4, Room 4.26
    Telephone:       8313 3240

    Course Timetable

    The full timetable of all activities for this course can be accessed from Course Planner.

  • Learning Outcomes
    Course Learning Outcomes
    On successful completion of this course students will be able to:
    1 understand, at the level of formal analysis, the major models of international trade and be able to distinguish between them in terms of their assumptions and economic implications
    2 understand the principle of comparative advantage and its formal expression and interpretation within different theoretical models
    3 be able to apply partial equilibrium and (where required) general equilibrium models in analysing the economic effects of (a) trade policy instruments such as tariffs, quotas, export subsidies, (b) retaliatory measures such as anti-dumping duties and countervailing duties and (c) the creation of regional trading arrangements such as free trade areas, customs unions and common markets
    4 be familiar with, and be able to critically analyse the main arguments for protection and conversely be able to critically evaluate the relevance and realism of arguments for free trade, taking into account the costs and benefits of trade policy measures on different sections of the community and the implications for the formulation of trade policy
    5 be familiar with the major recent developments in the world trading system, and be able to critically analyse key issues raised both by the current round of WTO negotiations and by the spread of regional trading arrangements
    6 develop communications skills through the presentation of your work, interactions during tutorial sessions, and appropriate use of the discussion board
    University Graduate Attributes

    This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:

    University Graduate Attribute Course Learning Outcome(s)
    Knowledge and understanding of the content and techniques of a chosen discipline at advanced levels that are internationally recognised. 1-6
    The ability to locate, analyse, evaluate and synthesise information from a wide variety of sources in a planned and timely manner. 1-6
    An ability to apply effective, creative and innovative solutions, both independently and cooperatively, to current and future problems. 1-6
    Skills of a high order in interpersonal understanding, teamwork and communication. 1-6
    A proficiency in the appropriate use of contemporary technologies. 1-6
    A commitment to continuous learning and the capacity to maintain intellectual curiosity throughout life. 1-6
    A commitment to the highest standards of professional endeavour and the ability to take a leadership role in the community. 1-6
    An awareness of ethical, social and cultural issues within a global context and their importance in the exercise of professional skills and responsibilities. 1-6
  • Learning Resources
    Required Resources
    Exchange Rates and International Finance, (4th or 5th Edition) Laurence Copeland, Prentice Hall/Financial Times (Pearson Education), 2005/8
    Recommended Resources

    There are several other texts which could have been used on this course. None are recommended here as substitutes to Copeland, since the different texts use a variety of approaches to the models to be discussed, and this can be a source of confusion. Nevertheless

    One supplementary text which is of value to course participants is An Introduction to International Money and Foreign Exchange Markets, by Charles Van Marrewijk. It provides particularly good discussions of purchasing power parity and interest rate parity.

    It is available at http://www.economics.adelaide.edu.au/research/papers/doc/econwp04-02.pdf 

    Online Learning
    MyUni - http://www.myuni.adelaide.edu.au 

    Other online Resources:
    WTO: http://www.wto.org 
    UNCTAD: http://www.unctad.org 
    OECD: http://www.oecd.org 
    International Center for Trade and Sustainable
    Development: http://www.ictsd.org 
    The World Bank: http://www.worldbank.org 
    Alan Deardorff’s Glossary of International Economics Terms:
  • Learning & Teaching Activities
    Learning & Teaching Modes

    The lectures will closely follow this text. The idea is that the lectures and the text should reinforce each other. You are strongly advised to keep up with the reading. You will find that the lectures are far easier to follow if you have already been exposed to the material via the text.

    The tutorial will be primarily based on problem solving in preparation for your assessment.

    Workload

    The information below is provided as a guide to assist students in engaging appropriately with the course requirements.

    Lectures: 2 Hours per week
    Tutorials: 1 Hour per week
    Home study expectation: 6 Hours per week

    Learning Activities Summary
    Please note, the following schedule is tentative. Changes can and will be made throughout the semester as necesary, all changes will be published on MyUni.

    Week Course Plan
    TOPIC READINGS
    1 Course Overview:
    Introduction to Basic Concepts in International Finance
    Copeland - Chapter 1 & 2
    2 Financial Markets in the Open Economy Copeland - Chapter 3
    3 Open Economy Macro Copeland – Chapter 4
    4 Flexible Prices: The Monetary Model of Floating Exchange Rates Copeland – Chapter 5
    5 Flexible Prices: The Monetary Model of Floating Exchange Rates Copeland – Chapter 5 (cont)
    6 Fixed Prices: The Mundell-Fleming Model with Imperfect Capital Mobility Copeland – Chapter 6
    7 Sticky Prices: The Dornbusch Model Copeland – Chapter 7
    8 Mid sem test Copeland – Chapters 1-7
    ** Mid-Term Test (Week 1 to Week 7 inclusive)
    9 Portfolio balnace Copeland – Chapter 8
    10 Currency substitution Copeland – Chapter 9
    11 Currency Areas and Monetary union Copeland – Chapter 11
    12 Currency Areas and Monetary union Copeland – Chapter 11
  • Assessment

    The University's policy on Assessment for Coursework Programs is based on the following four principles:

    1. Assessment must encourage and reinforce learning.
    2. Assessment must enable robust and fair judgements about student performance.
    3. Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
    4. Assessment must maintain academic standards.

    Assessment Summary
    Students will be assessed based on the following:

    Type Weight Due Date Objective
    Mid-semester Test 25% 28 April 2014
    Group Assignment 10% 11 April 2014 (COB)
    Tutorial 10%
    Investment game 20%
    Final Exam 35%
    Assessment Related Requirements

    All marks received prior to the final examination are equated into your final grade only if they represent improvement over your final examination grade. For example, should you score 80/100 on the mid-term, 60/100 on your assignment, 100/100 for your tutorial and 70/100 on the final, your final grade would be credit at (0.30*80+0.10*60+0.10*100 +0.50*70=) 75/100. More will be explained about this throughout the semester. Since all marks received prior to the final examination are redeemable, you have nothing to lose and everything to gain by attending tutorials and doing your best on all of the assessments.

    Should you miss either mid-semester examination for whatever reason, your final examination will be worth 30% more per missed mid-semester exam. You need not excuse yourself for your absence, as there will be no make-ups under any circumstances. This same policy applies to the assignment. Whatever you miss simply adds additional weight to the final.

    The Investment Game – Students may opt to play the investment game. To play, open a demo account at www.cmcmarkets.com.au/en using your university email address. Demo accounts using private email addresses are not valid for the game. You will receive $10,000 of play money in your account. The game begins Monday 3/3/14 and ends Friday 30/5/14. The purpose is to make the most money trading foreign exchange, commodities and securities. Grading will proceed as follows:
    28/3/14 – online submission of first trading report with accompanying screen capture. 5 points
    acct value < -1 sd below mean  2/5
    -1 sd below mean < acct value < +1 sd above mean  3/5
    +1 sd above mean < acct value  4/5
    +2 sd above mean < acct value  5/5
    25/4/14 – online submission of second trading report with accompanying screen capture. 5 points
    acct value < -1 sd below mean  2/5
    -1 sd below mean < acct value < +1 sd above mean  3/5
    +1 sd above mean < acct value  4/5
    +2 sd above mean < acct value  5/5
    30/5/14 – online submission of trading final report with accompanying screen capture. 10 points
    acct value < -1 sd below mean  6/10
    -1 sd below mean < acct value < +1 sd above mean  7/10
    +1 sd above mean < acct value  8/10
    +2 sd above mean < acct value  9/10
    +3 sd above mean < acct value 10 /10
    Note- Final report points supersede all previous points earned. For example, if during first two reports, you only accrued 6 points, but on the final report you accrued 9/10 then I will drop your two previous report scores such that you get 18/20 for the game.

    Assessment Detail

    NOTES ON ASSESSMENT
    1. Legible hand-writing and the quality of English expression are considered to be integral parts of the assessment process. Marks cannot be awarded for handwriting that cannot be read.

    2. Assessment marks prior to the final exam may be displayed on the course website through Myuni. Students are encouraged to check their marks and notify the lecturer-in-charge of any discrepancies.

    EXAMINATIONS
    It is each student's responsibility to read the examination timetable. Misreading the timetable is not accepted as grounds for granting a supplementary exam. University staff are not permitted to provide examination times to students over the telephone or in response to personal enquiries.

    Students may NOT take into the examination a DICTIONARY (English or English-Foreign)
    Students may NOT take a CALCULATOR.

    Submission

    Assignments are to be submitted via the Professions Undergraduate Hub on Ground Level of Nexus 10.

    Assignments will generally be returned during tutorials/lectures the week following submission.

    Students must not submit work for an assignment that has previously been submitted for this course or any other course without prior approval from the lecturer-in-charge.

    Course Grading

    Grades for your performance in this course will be awarded in accordance with the following scheme:

    M10 (Coursework Mark Scheme)
    Grade Mark Description
    FNS   Fail No Submission
    F 1-49 Fail
    P 50-64 Pass
    C 65-74 Credit
    D 75-84 Distinction
    HD 85-100 High Distinction
    CN   Continuing
    NFE   No Formal Examination
    RP   Result Pending

    Further details of the grades/results can be obtained from Examinations.

    Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.

    Final results for this course will be made available through Access Adelaide.

  • Student Feedback

    The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.

    SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.

  • Student Support
  • Policies & Guidelines
  • Fraud Awareness

    Students are reminded that in order to maintain the academic integrity of all programs and courses, the university has a zero-tolerance approach to students offering money or significant value goods or services to any staff member who is involved in their teaching or assessment. Students offering lecturers or tutors or professional staff anything more than a small token of appreciation is totally unacceptable, in any circumstances. Staff members are obliged to report all such incidents to their supervisor/manager, who will refer them for action under the university's student’s disciplinary procedures.

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