1. ECON 511 International Finance & Open Macroeconomy CHAPTER ONE
Introduction to International Finance

2. I. Introduction WHY STUDY OPEN- ECONOMY MACROECONOMICS & FINANCE
Are we involved with international economics in our daily lives?
How the international finance be a part of the international economics?

3. WHY STUDY EXCHANGE RATE POLICY?
What is the exchange rate?
When do we need the exchange rate?
How the exchange rate policy is important?

4. IS THERE ANY LINK BETWEEN EXCHANGE RATE POLICY & GLOBALIZATION?
Think of : “ The relationship between international financial markets & exchange rate ”

5. STUDYING THE ECONOMICS INTERNATIONAL FINANCE
Impact on output
Impact on level of employment
Impact on price level
Impact on balance of payments

6. II. Macroeconomic Models of the Open Economy
Open Economy v.s Closed Economy
Modeling open economies is inherently complex
There are two main different approaches to model the macroeconomy
The first approach is the classical approach
The second approach is the Keynesian approach
However, there is a discussion of exchange rate overshooting