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International Finance

Exam number: 6404

Semester: from 1st semester

Duration of the module: One semester

Form of the module (i.e. obligatory, elective etc.): Elective

Frequency of module offer: Irregularly

Prerequisites: Summer semester 2015: 15 students only. First come, first served.
Knowledge in micro- and macroeconomics, math and statistics. Knowledge in game theory (sequential/simultaneous games, Nash-equilibrium, backward induction). Knowledge with respect to macroeconomic models of the open economy (PPP, UIP, Mundell-Fleming model, monetary model). A refresher of the macroeconomic models of the open economy will be provided in the exercise classes.

Applicability of module for other study programmes:
Obligatory or elective in other study programmes. For further information check regulations of the study programme.

Person responsible for module: Prof. Dr. Georg Stadtmann

Name of the professor: Prof. Dr. Georg Stadtmann

Language of teaching: English

ECTS-Credits (based on the workload): 6

Workload and its composition (self-study, contact time):
Contact time (lecture, tutorials, seminar etc.) 45 h; self-study: 135 h

Contact hours (per week in semester): 3

Methods and duration of examination:
Presentation: 25 %
Written Exam: 75 %

Emphasis of the grade for the final grade: Please check regulations of the study programme

Aim of the module (expected learning outcomes and competencies to be acquired):
We will analyze micro- and macroeconomic models to understand speculative dynamics on financial markets and stability of financial markets. We will start with analyzing the impact of the different groups of financial investors on asset prices. Afterwards various kinds of financial crisis including banking, currency and sovereign debt crises will be examined. We will also discuss the policy implications and policy tools crisis to avoid such crises. Participants should deal with scientific literature and should present one paper in the exercise class.

Contents of the module:
1. Speculation: The basis for financial and currency crises?
2. Globalization of the financial markets
3. Bank-Runs
4. Currency crisis models
5. Models of currency crises

Teaching and learning methods:
Lectures, tutorials, seminar

Literature (compulsory reading, recommended literature):
Aschinger G.: Währungs- und Finanzkrisen (Taschenbuch); Vahlen, 1. Auflage (2001)
Bikhchandani, S.; Hirshleifer, D.; Welch, I. (1998): Learning from the Behaviour of Others: Conformity, Fads, and Informational Cascades, in: Journal of Economic Perspectives, Vol. 12(3), S. 151 -- 170.
Calvo, G.A. (1988): Servicing public debt: The role of expectations; in: American Economic Review, Vol. 78, No. 4, pp. 647-661.
Copeland L. S.: Exchange rates and international finance; Prentice Hall, Halow, 4. Edition (2005).
DeLong, J.B.; Shleifer, A.; Summers, L.H.; Waldmann, R.J. (1990): Positive Feedback Investment Strategies and Destabilizing Rational Speculation, in: Journal of Finance, Vol. 45(2), S. 379 -395.
Diamond, D.W.; Dybvig, P.H. (1983): Bank runs, deposit insurance, and liquidity; in: Journal of Political Economy Vol. 91, No. 3, pp. 401-419.
Froot, K.A.; Scharfstein, D.S.; Stein J.C. (1992): Herd on the Street: Informational Inefficiencies in a Market with Short-Term Speculation, in: The Journal of Finance, Vol. 47(4), S. 1461 -- 1484.
Milgrom, P.; Stokey, N. (1982): Information, trade and common knowledge, in: Journal of Economic Theory, Vol. 26, S. 17 -- 27.

Further information:
Registration in Moodle Viadrina required.