ECONOMIC AND FINANCIAL POLICY
The course aims to illustrate the functioning of a country's economy as a whole, deepening the analysis in cases where it is open to international trade and operates under a flexible or fixed exchange rate regime. The analysis is carried out for both the short, medium and long term, dwelling on the characteristics of the goods market, financial markets by illustrating the effects produced by fiscal and monetary policy. In addition, the course describes the role played by the expectations of economic agents in determining their decisions, and dwells on topics of particular interest such as the global economic and financial crisis and its effects on the European reality and monetary and fiscal policy choices.
General knowledge and reasoning ability. Knowledge of the basic concepts of microeconomics is required. Some basic knowledge of mathematics, if previously acquired by the student, can facilitate the learning process. For students lacking these prerequisites, an integration including a relevant bibliographic references will be provided.
PART I EXCHANGE RATES AND MACROECONOMICS IN THE OPEN ECONOMY
Chapter 2. National accounts and balance of payments
Chapter 3. Exchange rates and foreign exchange markets: a portfolio approach
Chapter 4. Money, interest rates and exchange rates
Chapter 5. Price levels and exchange rates in the long run
Chapter 6. Output and the exchange rate in the short run
Chapter 7. Fixed exchange rates and foreign exchange market intervention
I (24 hours) EXCHANGE RATES AND MACROECONOMICS IN THE OPEN ECONOMY
National Accounts and Balance of Payments; Exchange Rates and Foreign Exchange Markets: a Portfolio Approach; Money, Interest Rates and Exchange Rates; Price Level and Exchange Rate in the Long Run; Output and Exchange Rate in the Short Run; Fixed Exchange Rates and Foreign Exchange Market Intervention
Lecture Block II (24 hours) FINANCIAL INSTITUTIONS AND MARKETS.
Financial Institutions; Banks and fundamentals of management; Interest rates and their role in valuation; Central Banks; Financial markets and interest rates, Risk and interest rates; Money, bond, equity and foreign exchange markets
Classroom Lessons; classroom exercises.
Krugman P. Obstfeld M.-Melitz M.J., Economia internazionale 2 – 11a ed, Pearson 2019 Krugman P. Obstfeld M.-Melitz M.J., International Economics 2 - 11th ed, Pearson 2019
Financial Institutions and Markets 9/Ed. Pearson - Frederic S. Mishkin - Stanley G. Eakins - Elena Beccalli
The assessment is based on a written examination composed of thematic questions aimed at evaluating the actual achievement of the objectives on part the students. In order to evaluate the depth in understanding general theoretical knowledge, the classwork includes open questions on the program’s topics. In their answers the students should be able to show and illustrate the fundamental concepts acquired during their studies. In order to evaluate the ability to apply the economic models discussed at lesson and in the suggested readings, mathematical proofs of some theorems can be required. The written examination is made up of six questions; to each of them a maximum of 6 mark-points is allocated up to grand total of 36 (extra points above 30 signal for a possible laude). The laude can be assigned if the student shows, in his/her answers, a particular ability in deepening the topics of the examination’s questions. The duration of the written examination is 1 hour and 15 minutes. During the examination, the use of notes, books and informatics devices (smartphone, tablet, pc, ecc.) is not allowed.
An oral examination can also be held, if the teacher judges it useful to better ascertain the student’s knowledge. The vote of the oral examination is expressed in scale from 0 to 30, and it is averaged with the vote of written examination (with equal weighting) in order to determine the final vote.
The teacher can offer to the students also a mid-term written examination, which is made up of 4 questions; to each of them a maximum of 9 mark-points is allocated up to grand total of 36 (extra points above 30 signal for a possible laude). In a successive exam session, the students must pass a written examination made up of four questions, related to the remaining part of the study program; the evaluation will follow the same scheme of the mid-term examination. The final mark will be determined by computing the average value between the mid-term and the final examination.
Prerequisites: Institutions of Economics