International Trade and Finance

Code:

2ECON26

Acronym:

ITF

Keywords
Classification	Keyword
CNAEF	Economics

Instance: 2020/2021 - 2S

Active?	Yes
Course/CS Responsible:	Master in Economics

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
ME	18	Bologna Syllabus	1	-	7,5	56	202,5

Teaching language

English

Objectives

- Description of main trade theories that explain observed trade patterns in global trade;
- Presentation of (i) the main explanations for firm's decisions on exports, international outsourcing, and FDI; (ii) main determinants of trade geography; and (iii) instruments and impacts of trade policies;
- Description of the contents of the Balance of Payments;
- Analyse the behaviour of exchange rates: facts, theories and policies;
- Description of the criteria for deciding international borrowing and financial investment;
- Presentation of the instruments and techniques for hedging foreign exchange risk.

Learning outcomes and competences

At the end of the course, students should be able to:
- identify major actors and trends in world trade;
- explain trade composition and trade geography;
- explain why firms may decide to export, to outsource, or to invest abroad;
- identify main trade policy measures and to explain their market and welfare effects;
-read and interpret the main items in a Balance of Payments;
- identify the main reasons behind the behaviour of any exchange rate, both in the short run and in the long run;
- hedge foreign exchange risk, using the most common instruments in international finance.

Working method

Presencial

Program

Part I
1. World trade overview
2. Trade and comparative advantages
3. Increasing returns and the gravity equation
4. Firms in the global economy: Exports, outsourcing and MNEs
5. Trade policy: Instruments, political economy and EU's policy
6. Trade policy in developing countries, and controversies
7. Trade, growth, and wages

Part II
1. The link between international trade and international finance
2. The Balance of Payments and the Net Investment Position
3. Foreign exchange markets and exchange rates
4. The interest rate parity: investment and financing criteria
5. Foreign exchange risk and hedging in international trade
6. Exchange rate regimes
7. Models of determination of exchange rates
8. Exchange rate forecasting and market efficiency

Mandatory literature

Paul Krugman; Maurice Obstfeld; Marc Melitz; International Economics: Theory and Policy, Addison-Wesley, 2012
Maurice Levi; International Finance, Routledge, 2009

Comments from the literature

Along the course, a set of papers will be delivered to the students.

Teaching methods and learning activities

Theoretical and applied lectures. Discussion of research papers and technical reports. Solving of quantitative problems.

Evaluation Type

Distributed evaluation without final exam

Assessment Components

Designation	Weight (%)
Teste	85,00
Trabalho escrito	15,00
Total:	100,00

Amount of time allocated to each course unit

Designation	Time (hours)
Apresentação/discussão de um trabalho científico	3,00
Estudo autónomo	127,50
Frequência das aulas	42,00
Trabalho escrito	30,00
Total:	202,50

Eligibility for exams

Continuous evaluation requires students to attend at least 75% of the lectures.

Calculation formula of final grade

Continuous evaluation: Each part of the course weights 50% on the student final grade.
Evaluation of Part I of the course encompasses 1 written test (70%) and 1 written report (30%). The evaluation of Part II of the course consists of 1 written test (100%).
The alternative to the continuous evaluation is a comprehensive exam (100%).

Examinations or Special Assignments

In the case of online evaluation, the test can be complemented by an individual oral discussion, at the request of the teacher, to clarify any doubt in the answers.