Concepts and Current Issues in International Finance January February 2013

Faculty contact (Email-id and Mobile) ( r!) "! #nant$a %a&es'aran (ee)atma*&mail!com Mobile+ ,-1-./020 -1/-- ('$en in India) ,0/--.311201 (2in&apore) Required text book Global Crisis, Recession and Uneven Recovery (by r! 3!"! 4eddy) Orient Blackswan i!ited "rice # $%$&'' ()B* # %+,-,.-/$'-0.,$-1 "a2es # 00, Bindin2# 3ardback Book )i4e# .,' x /0' !! 5ear # /'..

#dditional 5 2u&&ested 4eadin&s .& 67ri&ins o8 8inancial crises9 by Geor2e Coo6er /& 6E:orbitant ;ri)ile&e9 by Barry 7ic8en2reen 9& <$e =reat 2ta&nation9 by "ro:& ;yler Cowen Course 7b(ecti)es ;8is course 6ri!arily ai!s to !ake students intelli2ent and 6erce6tive users o: :inancial 6ress and !edia& ;8e course would acquaint students wit8 conte!6orary issues and develo6!ents in international :inancial !arkets suc8 as t8e Global econo!ic crisis, t8e debt crisis and t8e :ate o: t8e sin2le currency in 7uro6e, t8e U) :inancial crisis and its a:ter!at8, t8e accu!ulation o: international reserves by develo6in2 countries and t8e outlook :or <sia, etc& (n t8e course o: ex6lainin2 t8ese develo6!ents, students would also learn i!6ortant conce6ts suc8 as "urc8asin2 "ower "arity, Relative "urc8asin2 "ower "arity, (nterest Rate "arity, Real and *o!inal 7::ective 7xc8an2e Rates, !odels o: exc8an2e rate deter!ination, 8istory o: various exc8an2e rate arran2e!ents, international equity and bond !arkets& ;eda&o&y+

ectures and classroo! discussions&

2ession 'ise details (>en&t$ o8 sessions assumed to be 1/0 minutes 8or t$e purposes o8 t$e table belo'! ?ence@ t$e table belo' is indicati)e)
2essio ns

Co)era&e Review o: !acro conce6ts& =iscussion on (ndian !acro-econo!y& >uick revision o: basic conce6ts - real rate, risk and return, exc8an2e rate units

4eAuired ;re-4eadin&

#cti)ity 5 E:ercise ?atc8in2, istenin2 and =iscussin2 =r& 5&@& ReddyAs talk at t8e *C<7R <nnual (ndia "olicy Boru! /'./ (Culy)& 8tt6#DDwww&youtube&co !Dwatc8E vFvR.GG(oB16kH:eat ureFyoutu&be 8tt6#DDwww&youtube&co !Dwatc8EvFt;o4n?$IIwH:eatureF youtu&be (;8e >H< session t8at :ollowed 8is lecture) (.) "arity Conditions (/) Bi2 Kac (ndex o: 7cono!ist (9) (nterest Rate Butures (0) 7xc8an2e rates and interest rate di::erentials (6resentation) #nalysis o8 %EE4@ 4EE4 and t$e trade balance 8or India@ B2@ BC and Canada! Correlation and statistical re&ression analysis e:pected! <$is is an indi)idual assi&nment!

1-2

(nternational "arity conditions J """, (R" and Bis8er "arities& 2-3

3-1

*o!inal and Real 7::ective 7xc8an2e Rates (*77R H R77R) *otions o: exc8an2e rate co!6etitiveness& 7xc8an2e Rate Borecastin2

B() note on Carry ;rade& Bundesbank *ote on (R" and Carry;rade

<n Overview o: (nternational Konetary )yste!s and Recent =evelo6!ents in (nternational Binancial Karkets

Kira2e o: Bixed 7xc8an2e Rates (Obst:eld H Ro2o::) Case :or exc8an2e rate :lexibility in oil ex6ortin2 nations (Brad )etser 6a6er) Bixed to Blexible (Barry 7ic8en2reen, et al)

Baculty 6resentation# LRules o: t8e Ga!e# (nternational Konetary <rran2e!ents since t8e ?orld ?ar ((A

1-0

Rules o: t8e Ga!e# (nternational Koney in 3istorical "ers6ective, 6a6er by Ron KcIinnon LGold )tandardA by Kic8ael Bordo (8tt6#DDwww&econlib&or2DlibraryD7ncDG old)tandard&8t!l) L;8e classical 2old standard# so!e lessons :or todayA by Kic8ael Bordo (Bederal Reserve Bank o: )t& ouis, Kay .%,.)

(nternational Binancial Karkets

.) Credit )uisse <nnual (nvest!ent Returns 5ear Book# /''% - /'./ J selected essays# /''%# Iee6in2 :ait8 wit8 stocks and ookin2 to t8e lon2-ter! /'.'# 7!er2in2 !arkets and 7cono!ic Growt8 /'..# >uest :or yield /'./# Currency !atters (/) (ntroduction and C8a6ter . o: ?illia! BernsteinAs LBour "illars o: (nvestin2A (9) Ot8er !iscellaneous 6a6ers on !arket correlation under t8e :older LKarket CorrelationsA

Class-roo! discussion and inclass 2rou6 6resentations& Baculty to 6resent (nvest!ent =ecision;ree and L?8y sustained success:ul lon2-ter! investin2 is s6iritualEA

.-D

(0) LBaby Boo!ers and U) )tock ReturnsA (BRB)B 7cono!ic etter) ($) BoC 6a6er on Co!!odities and oose Konetary "olicy 7t$er readin&s (.) ?orld Bederation o: 7xc8an2es (www&world-exc8an2es&or2) (/) <sian Bonds Online (www&asianbondsonline&or2) Kont8ly Bond Konitors and ?eekly =ebt 3i28li28ts (9) Cere!y Grant8a! *ewsletters (/''+ and so!e selected ones) (0) "resentation on (nvest!ent Researc8 and (nvest!ent =ecision :low-c8art )ections ( and @ o: =r& ReddyAs book J all c8a6ters in t8ese sections& L?8atAs inside <!ericaAs banks by Brank "artnoy M . (Canuary /'.9)

Global Binancial Crisis and i!6lications :or (ndia --10

Baculty 6resentation

#ssessment Criteria+

Component Class 6artici6ation <ssi2n!ent ((ndividual) <ssi2n!ent (Grou6) >ui44es (/ G $N) (ndividual Binal 7xa!

Eei&$ta&es .'N /'N /$N .'N 9$N

E:pectations 8rom t$e Class + )ince !ost o: t8ese conce6ts are si!6le :or KB< students to learn, students would be ex6ected to 8ave co!6leted t8eir assi2ned course readin2 be:ore t8ey ca!e to t8e class& Burt8er, t8ey s8ould be able to, 6re6ared to and are ex6ected to a66ly conce6ts learnt in ot8er courses to analyse situations discussed in t8is course& Class 6artici6ation would be evaluated :or attendance, level and quality o: 6artici6ation rat8er t8an on t8e 6ositions taken on issues& ;8ere are no ri28t or wron2 answers& ;8e 2rou6 assi2n!ent involves class 6resentations by one or all !e!bers o: t8e 2rou6s& 7valuation o: 2rou6 assi2n!ent will take into account ori2inal insi28ts and analysis 6resented& "resentations o: !ere su!!aries o: t8e 6a6er will attract lower scores& ;la&iarism and copyin& eac$ ot$er9s ans'ers 'ill be sub(ect to se)ere &rade depletion! ;8ere will be two qui44es and one :inal exa!& ;8ey will be closed-book evaluations& ;8e (nstitute will sc8edule t8e! in consultation wit8 students& e2ible 8andwritin2 is ex6ected in t8e :inal exa! answer book& #cademic inte&rity and an aptitude 8or learnin&@ 'illin&ness to commit mistaFes@ to asF Auestions and an open mind are t$e Fey in&redients to deri)e t$e ma:imum milea&e 8rom t$is course!