Econ 322- International Finance Spring 2013 Introduction Ayse Kabukcuoglu

Goals of the course International finance is one of the many elective courses offered by CASE This course covers timely and important topics in international finance: exchange rates, the balance of payments, and the role of policy I would like you all to enjoy the course, learn some international finance and get good grades

Today’s lecture Syllabus Textbook, lecture notes, course evaluation (attendance, exams, assignments, quizzes), make-up policy, early final exams Econ202 and Econ322 A short intro to international finance

Textbook: International Macroeconomics, Robert C. Feenstra and Alan M Textbook: International Macroeconomics, Robert C. Feenstra and Alan M. Taylor (2012), Worth Publishers, 2nd Ed.

Authors Prominent international economists Prof. Robert Feenstra - University of California, Davis Prof. Alan Taylor - University of Virginia

The textbook Available at the bookstore Do you need to buy the book? We will cover 8-9 chapters (most of the book) It is fun to read… You will have homework assignments/study questions from the book Reading the book will definitely help you get a better grade

Lecture notes Slides (in pdf and ppt format) Detailed and regularly updated Will be posted after the lecture No substitutes to the class Course evaluation will not be based only on the material included in the slides Anything covered in the class, homework, quizzes, etc. will be important for the exams

Course website https://ais.ku.edu.tr/course/24439/Default.html(Or go to ‘courseware list’) All course material will be posted there lecture notes past exams study questions/assignments announcements

Study tips Study on a regular basis The course material will grow very fast Each new topic will be related to the previous topic(s) Solve homework questions for self study Review the lecture notes and read the book Go to office hours for further help

Office hours My office hours: Tue 3.30 pm-5.30 pm (CAS 276) Or by appointment Email me for an appointment (akabukcuoglu@ku.edu.tr) No office hours this week

Teaching assistant Cavit Baran (cabaran13@ku.edu.tr) Office hours will be announced later this week Responsible for grading

Evaluation Exams: 1 midterm + 1 final Most questions involve problems with simple math Some short essay questions Closed notes/closed book, no calculators, no cheat sheets The midterm will be held in class (March 11, 2pm-3:15 pm) The final exam date TBA by the Registrar Final exam will be cumulative

Evaluation Homework and Quizzes 4 or 5 homework with questions mostly from textbook exercises I may also assign readings (research papers, newspapers, etc.) The homework will not be graded A max. of 10 pop-quizzes related to the homework questions The lowest 2 of your quiz grades will be dropped

Grading Exams: 85% Pop quizzes: 15% (the lowest 2 will be dropped) max(35% midterm+50% final, 20% midterm+65% final) (i.e. If you have a dramatic improvement in your second exam grade relative to the first, I will take this into account) Pop quizzes: 15% (the lowest 2 will be dropped) Homework: 0%

Make-up policy Exams: If you have a valid excuse (e.g. health problem or family emergency), you may be eligible for a make-up Provide a document (e.g. medical report) if possible You must contact me ASAP when you miss an exam You can take only one make-up exam (if you miss two exams, the make up will be given for the midterm only) The make-up will be given at the end of the semester and will be cumulative (date and place TBA)

Make-up policy Quizzes: No make-up quizzes will be given under any circumstances However, the lowest two of your quiz grades will be dropped

Attendance and participation Attending the lectures and participating in discussions are important Although you will not be directly evaluated based on attendance/participation, they are essential for performing well in this course

Attendance and participation Please make an effort to join discussions Do not hesitate to ask questions Try to pay attention to the class Please avoid all kinds of distracting behavior Talking to your neighbors constantly during the lectures Texting (switch off your cell phones!) Always coming to the class late

Pre-requisites Econ 202 (intermediate macroeconomics) Prior knowledge of intermediate macro will be assumed on topics such as IS-LM model Monetary and fiscal policy; their interactions with key macroeconomic variables National income accounting

Econ 322: International Finance Course outline The global macroeconomy The exchange rate Balance of payments, policy, etc. Special topics

Econ 322: International Finance Course outline The global macroeconomy a summary of this semester’s topics (Ch. 1)

Course outline 2. The exchange rate Intro. to Exchange Rates and the Foreign Exchange Market, Ch. 2 Exchange Rates I: The Monetary Approach in the Long Run, Ch. 3 Exchange Rates II: The Asset Approach in the Short Run, Ch. 4

Course outline Midterm exam covering chapters 1-4 March 11, in class

Course outline 3. Balance of payments National and International Accounts: Income, Wealth, and the Balance of Payments,Ch. 5 Balance of Payments: Gains from Financial Globalization, Ch. 6 The Balance of Payments II: Output, Exchange Rates, and Macroeconomic Policies in the Short Run, Ch.7 

Course outline 4. Hot topics in international macroeconomics Fixed versus Floating: International Monetary Experience, Ch. 8 Topics in International Macroeconomics (A closer look at issues such as the global financial imbalances, the global macroeconomy and the 2007-2009 crisis, etc.) Ch. 11 (if time permits)

This course Is mainly on a country’s economic analysis in a global macroeconomic environment Will pay attention to Turkish economy to some extent Will have a heavy focus on the US, Europe as well as emerging economies such as China

Courses that you might be interested in Econ 360 - Money and Banking by Selva Demiralp Econ 480 – Economics of Institutions by Sumru Altug Econ 481- Turkish Economy by Kamil Yilmaz

Any questions?

Now: a brief look at the world economy Some economic updates from the Federal Reserve Bank of Dallas (Readings will be posted) Focus on GDP growth, inflation, exchange rates and external imbalances Throughout the course, we will talk about theories and empirical evidence to understand the global economic phenomena Here are some examples:

GDP growth in the world

GDP growth and inflation for emerging economies

It is not only Turkey facing a currency depreciation…

Low inflation in Euro-Area

Chinese GDP growth

Capital flows to emerging economies

Euro-Area net exports