KING'S COLLEGE LONDON

(University of London)

King’s Business School

6QQMN969: INTERNATIONAL FINANCE

2023-24

Module Outline

The aims of the module are:

• To provide students with a theoretical and practical understanding of international
finance
• To cover key topics in international finance, such as the balance of payments,
determination of exchange rates, advantages and disadvantages of different exchange
rate regimes, and international capital flows
• To apply the models to the analysis of policy interventions and world events

On completion of the module, students should be able to:

• Understand the determinants of exchange rates
• Understand the components of the balance of payments
• Demonstrate a systematic understanding of the main concepts and models of
international finance
• Apply these models to study the effect of different economic policies, such as fiscal and
monetary interventions and capital controls
• Understand the advantages and disadvantages of different exchange rate regimes
• Understand the benefits and risks of international capital flows
• Apply the models studied in the module to topical policy questions, such as financial
globalisation and current account imbalances

This module is inclusive, equitable and transparent.

Teaching
The lectures and tutorials will be taught by Dr.Filipa Sá (first half) and Dr Margaret Davenport
(second half). There are weekly two-hour lectures and one-hour tutorials each fortnight.
Lectures cover concepts and models. Tutorials go over the application of these models to
specific problems.

A revision lecture and a guest lecture are scheduled for revision week (24th April).

Textbooks
The module textbook, which you are advised to purchase, is:

Feenstra and Taylor, International Macroeconomics, 5th edition (2021), Worth MacMillan

We will also be covering some academic papers (listed below).

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Lecture Notes and Tutorials

Lecture notes and problem sets used for tutorials will be available for download on the module
webpage on KEATS.

Prerequisites

Students are required to have successfully completed either 5SSMN937 Macroeconomics or

5SSMN931 Intermediate Macroeconomics. The module assumes that you have a good
understanding of the concepts covered in those modules.

Assessment
There are two assessment components:

• 25% midterm test

This is a 24-hour take home coursework, to take place the week after reading week.

• 75% written examination

This is a 2-hour in-person exam, to take place during the May assessment period.

Office Hours and Contact Details

Dr Filipa Sá Wednesdays 2:00-3:00 pm
filipa.sa@kcl.ac.uk Thursdays 10:00-11:00 am
Bush House central block N4.11
Dr Margaret Davenport Thursdays 2:00-3:00 pm
margaret.davenport@kcl.ac.uk (additional hours if needed send request via email)
Bush House central block N4.11

Topics and Readings

Lecture 1 Introduction to international finance: key concepts

Feenstra and Taylor chapters 1 and 2

Lecture 2 National and international accounts

Feenstra and Taylor chapter 5

Speech by Ben Bernanke (former chairman of the Federal Reserve) “The Global Saving Glut
and the U.S. Current Account Deficit”, March 2005, available at:
http://www.federalreserve.gov/boarddocs/speeches/2005/200503102/

Caballero, Ricardo J., Farhi, Emmanuel and Gourinchas, Pierre-Olivier (2008), “An
Equilibrium Model of “Global Imbalances” and Low Interest Rates”, American Economic
Review, Vol. 98, No. 1, pages 358-393

Sá, Filipa, Towbin, Pascal and Wieladek, Tomasz (2014), “Capital Inflows, Financial Structure
and Housing Booms”, Journal of the European Economic Association, Vol. 12, Issue 2, pages
522-546
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Krugman, Obstfeld and Melitz, International Economics, 12th edition (2022), Pearson, chapter
13

Lecture 3 Exchange rates: the monetary approach in the long run

Feenstra and Taylor chapter 3

Krugman, Obstfeld and Melitz, chapters 15 and 16

Lecture 4 Exchange rates: the asset approach in the short run

Feenstra and Taylor chapter 4

Krugman, Obstfeld and Melitz, chapter 14

Lecture 5 Macroeconomic policies in the short run

Feenstra and Taylor chapter 7

Krugman, Obstfeld and Melitz, chapter 17

READING WEEK: 19-23 FEBRUARY

MIDTERM TEST

Lecture 6 International finance: the empirics of key concepts

Feenstra and Taylor chapter 2 and 4

Taylor, Alan and Taylor, Mark (2004), “The Purchasing Power Parity Debate”, Journal of
Economic Perspectives, Vol. 18, Issue 4, pages 135-158

Lecture 7 Financial globalisation and the international financial architecture

Feenstra and Taylor chapter 6

Eichengreen, Globalizing Capital: A History of the International Monetary System, 3rd edition
(2019), Princeton University Press

Eichengreen, Exorbitant privilege: the rise and fall of the dollar, 2011, Oxford University Press

Gourinchas, Pierre-Olivier, and Rey, Hélène (2022), “Exorbitant Privilege and Exorbitant
Duty”, IDEAS Working Paper Series from RePEc

Lecture 8 Exchange rate regimes and international policy choice

Feenstra and Taylor chapter 8

Rey, Hélène (2018), “Dilemma not trilemma: the global financial cycle and monetary policy
independence”, IDEAS Working Paper Series from RePEc
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Lecture 9 Exchange rate crises and capital flow volatility

Feenstra and Taylor chapter 9

Saxena, Sweta C. (2004), “The Changing Nature of Currency Crises”, Journal of Economic
Surveys, Vol. 18, Issue 3, pages 321-350.

Reinhart, Carmen M. and Rogoff, Kenneth S. (2009), This Time is Different: Eight Centuries
of Financial Folly, Princeton.

Lecture 10 Data and measurement in international finance & frontier issues

Coppola, Antonio, Maggiori, Matteo, Neiman, Brent, and Schreger, Jesse (2021), “Redrawing
the Map of Global Capital Flows: The Role of Cross-Border Financing and Tax Havens”, The
Quarterly Journal of Economics, Vol. 136, Issue 3, pages 1499-1556

Gopinath, Gita, Boz, Emine, Casas, Camila, Díez, Federico J., Gourinchas, Pierre-Olivier, and
Plagborg-Møller (2020), “Dominant Currency Paradigm”, American Economic Review, Vol.
110, No. 3, pages 677-719

Revision lecture and guest lecture A two-hour session during revision week (24th April)