ECON 3510 - International Finance III

North Terrace Campus - Semester 2 - 2016

This course deals with the analysis of three important and related macroeconomics issues in open economies:exchange rates, capital flows and financial crises. The objectives of the course are two-fold: to introduce and critically evaluate the main relevant economic theories, models and empirical works in these three key areas of International Finance; and to apply these analytical tools to build an understanding of relevant economic developments and policy issues in the global markets. There will be discussions of relevant current events relating to Australia, our main trading partners and the rest of the world.

  • General Course Information
    Course Details
    Course Code ECON 3510
    Course International Finance III
    Coordinating Unit School of Economics
    Term Semester 2
    Level Undergraduate
    Location/s North Terrace Campus
    Units 3
    Contact Up to 3 hours per week
    Available for Study Abroad and Exchange Y
    Prerequisites ECON 2506
    Incompatible ECON 3032
    Assumed Knowledge ECON 2507
    Course Description This course deals with the analysis of three important and related macroeconomics issues in open economies:exchange rates, capital flows and financial crises. The objectives of the course are two-fold: to introduce and critically evaluate the main relevant economic theories, models and empirical works in these three key areas of International Finance; and to apply these analytical tools to build an understanding of relevant economic developments and policy issues in the global markets. There will be discussions of relevant current events relating to Australia, our main trading partners and the rest of the world.
    Course Staff

    Course Coordinator: Dr Steven Hail

    Office location: Nexus 10, Level 3, Room 3.34
    Telephone:       8313 5671

    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 explain the organisation and institutional details of foreign exchange and international money markets
    2 understand the significance of international flows of portfolio capital in the modern global foreign exchange market, and the world economy
    3 understand and apply, at a formal level, the main neoclassical models of exchange rate determination, and assess their empirical validity
    4 be familiar with insights provided by behavioural economics into expectations formation and decision making on the foreign exchange market
    5 understand and apply a macroeconomic model incorporating the above as a guide to exchange rate forecasting
    6 analyse the causes of historical exchange rate movements, and some of the contributory factors to a variety of financial crises, with reference to the models covered
    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)
    Deep discipline knowledge
    • informed and infused by cutting edge research, scaffolded throughout their program of studies
    • acquired from personal interaction with research active educators, from year 1
    • accredited or validated against national or international standards (for relevant programs)
    1-6
    Critical thinking and problem solving
    • steeped in research methods and rigor
    • based on empirical evidence and the scientific approach to knowledge development
    • demonstrated through appropriate and relevant assessment
    1-6
    Teamwork and communication skills
    • developed from, with, and via the SGDE
    • honed through assessment and practice throughout the program of studies
    • encouraged and valued in all aspects of learning
    1, 5, 6
    Career and leadership readiness
    • technology savvy
    • professional and, where relevant, fully accredited
    • forward thinking and well informed
    • tested and validated by work based experiences
    1-6
    Intercultural and ethical competency
    • adept at operating in other cultures
    • comfortable with different nationalities and social contexts
    • Able to determine and contribute to desirable social outcomes
    • demonstrated by study abroad or with an understanding of indigenous knowledges
    1-6
    Self-awareness and emotional intelligence
    • a capacity for self-reflection and a willingness to engage in self-appraisal
    • open to objective and constructive feedback from supervisors and peers
    • able to negotiate difficult social situations, defuse conflict and engage positively in purposeful debate
    4-6
  • Learning Resources
    Required Resources
    Currencies, Capital Flows and Crises, John T. Harvey, Routledge (London and New York), 2009
    Recommended Resources

    There are several other texts which could have been used on this course. None are recommended here as substitutes to Harvey, 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 would be of value to course participants in the early part of this course is Exchange Rates and International Finance, (4th or 5th Edition) Laurence Copeland, Prentice Hall/Financial Times (Pearson Education), 2005/8.  

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

    Other online Resources will be provided via the above site, during the course.
     
  • Learning & Teaching Activities
    Learning & Teaching Modes
    The lectures will closely follow the readings provided on-line, and the 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 tutorials will be primarily based on problem solving and discussions, in preparation for your final examination
    Workload

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

    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 necessary, and all changes will be published on MyUni. Supplementary reasings will also be provided on MyUni.

    Week Course Plan
    TOPIC CORE READINGS
    1 Course Overview: Introduction to Basic Concepts in International Finance and Foreign Exchange Markets Harvey - Chapter 1 and a Reading Provided via MyUni
    2 International Parity Relationships Reading Provided via MyUni
    3 Neoclassical Models 1 -The Monetary Model of Floating and Fixed Exchange Rates Harvey - Chapter 2
    4 Neoclassical Models 2 - The Mundell-Fleming Model of Fixed and Floating Exchange Rates Reading Provided via MyUni
    5 Neoclassical Models 3 - The Dornbusch Overshooting Model of Floating Exchange Rates Harvey - Chapter 2
    6 Empirical evidence on these models and later developments Reading provided via MyUni
    7 Institutional and behavioural economics and decision making in the foreign exchange market Harvey - Chapter 3
    8 Capital Flows and Exchange Rates Harvey - Chapter 4
    9 Exchange Rate Modelling using a Post-Keynesian Model Harvey - Chapter 5
    10 Expectations and Crises - theory and application Harvey - Chapter 5
    11 Further Real World Applications - volatility in the USD over time Harvey - Chapter 6
    12 Optimal Currency Areas, Monetary Sovereignty and the Euro-zone Experiment Reading provided via MyUni







    Specific Course Requirements
    None.
  • 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:

     
    Bi-Weekly Assignments (Six Assignments)
    40%
    Weekly, weeks 2-12, to be submitted on-line
    Continuous learning, both summative and formative assessment


    Final Exam
    60%
    See Exam Timetable
    Summative assessment

    * Please note that the Course Learning Outcomes have been mapped into University Graduate Attributes above. Teamwork is not being explicitly assessed within this course. However, it is assessed in a variety of other courses completed by the same students, often with the same lecturer. For example, many of these students also complete ECON 2508, which includes an extensive group assignment which necessitates effective teamwork.
    Assessment Element Weighting Course Learning Outcomes
    Bi-weekly assignments 40%  1-6, gradually across the semester
    Final examination 60%  1-6, emphasis on 4-6
    Assessment Related Requirements
    Assignment 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 75/100 on the weekly assignments and 60/100 on the final, your final grade would be credit at (0.4*75+0.6*60)= 66/100.

    More will be explained about this throughout the semester.

    Should you score 60/100 on the weekly assignments and 75/100 on the final, your final grade would be distinction, as only the 75/100 will count. More will be explained about this during the first week of the semester.

    Since 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 weekly assignments
    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 an alternative examination.

    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 into the examination a CALCULATOR.
    Submission
    Assignments are to be submitted during tutorials each week.

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

The University of Adelaide is committed to regular reviews of the courses and programs it offers to students. The University of Adelaide therefore reserves the right to discontinue or vary programs and courses without notice. Please read the important information contained in the disclaimer.