Course Number:            ITRN 602  Fall 2002 (Draft)

 

Course Title:              International Financial Institutions and the Forces of Globalization

 

This course examines character and dynamics of international financial institutions in the world economy and the interactions between the public and private sectors throughout the world. After a review of the mechanics of international financial systems and operations, the structure and composition of  various governmental financing regimes at the national and subnational levels are examined and their evolution under the influence increasing globalization.  The respective roles of the international investment and capital markets and international financial and donor institutions in the process of development are covered, with particular emphasis on emerging and transitioning economies. The growth of both international and domestic financial markets and instruments are reviewed, as is the evolving relationship between the public and private sectors.

 

Class Dates:               Mondays:  7:15 P.M. - 9:45 P.M.

                                                1st Class – August 26, 2002

                                                Last Class – December 2, 2002

                                                Final Exam – December 9, 2002 (regular class time)

 

Course Objectives:

This course provides an introduction to and survey of international finance and financial institutions. Aside from the basic mechanics of international finance and the institutions that support it, considerable emphasis will be placed on the historic and political context.  The course will be taught from interrelated three perspectives:  First will be that of the firm that has international financial operations and the basic concepts and procedures it must know in making plans and conducting operations. The second perspective will be that of the private and public financial institutions that are involved in international commerce and international financial relations. This will include not only the banking system, but also the specialized institutions that seek to promote, govern or influence international commerce and financial relationships. The third perspective will be that of creating markets in developing economies and their relationship with international commerce and with domestic governments.  How these are developed and integrated into the international markets will be addressed in this course. 

                                               

Instructor:                               John E. Petersen            (703) 273-2653 (H)            (703) 993-2286 (W)

                                                                                      eMail  jep@gmu.edu  Office ARL 265


Method of

Instruction:                             This course will be taught as a survey course. Many topics will be covered.  Some may not be considered as thoroughly as one might desire.  It is not a seminar, but I want you to participate in class discussion. Your participation should demonstrate an understanding of the course assignments (please read ahead)  and a familiarity with current developments in the areas of study.  

 

Requirements:                        Keep abreast of current issues in international finance by reading at least one newspaper with international coverage (Wall Street Journal, Washington Post, New York Times, Financial Times).  The Economist is highly recommended.  Participate actively in class discussions. Do your presentations, complete your research papers satisfactorily, and pass the examinations.

 

Class              

Presentations:                                    During the semester, you need to stay informed on current developments that are relevant to international finance and financial institutions. As part of your class participation grade, you will be assigned 5-minute individual presentations to be made about current news items dealing with international financial developments. These can be based on clippings from newspapers, magazines, newsletters, or professional journals. Any subject bearing on international finance is fair game.  Your presentation should summarize the news item and then relate it to some concept, practice, or problem in international finance and management, including your observations on its implications.  Please submit a one-page outline of your presentation to me when you give your presentation. I will hand out a schedule of the presentations at the third class session and there will be presentations at most sessions starting thereafter. Also, please do not exceed 5 minutes.

 

Interest

Profile:                                    Please write a brief (not more than one page) profile telling about your background, graduate-level course work, your career aspirations, and your expectations from this course. Please submit the interest profile to me no later than the September 16 class session.

 

Research

Paper:                                     One research paper is assigned during the semester.  It is not to exceed 10  pages, double-spaced, including charts or graphics, footnotes and references.  (Do not exceed 10 pages: I will stop reading after 10 pages and grade accordingly.)  I’d greatly appreciate your using 12 point type size. You may select a topic of interest to you in the area of international finance and financial management. The topic should be submitted to me beforehand is subject to my approval.  If you wish, you may select one from a list of topics that I will provide.

                                               

                                                The paper should demonstrate your ability to define the problem, point out its significance and make a reasoned argument as to why proposed or attempted solutions are, or were, better or worse, successful or not.  You are encouraged to use the work of others, but you should carefully quote and cite your sources.   I want your analysis and your conclusions. 

 

                                                Please have your research paper topic submitted no later than the September 23 class session and approved by me by September 30.  Research papers are due by November 11. Instructions will be provided concerning delivery. 

 

Books & Materials                    James Baker.            International Finance: Management, Markets, and Institutions

                                                            Prentice Hall (1998 edition)

                                                Joseph Stiglitz    Globalization and Its Discontents W.W. Norton (2002)

                                                Daniel Yergin and Joseph Stanislaw. The Commanding Heights Touchstone:                                                      Simon and Shuster (1999 edition)

                                                Paul Krugman. The Return of Depression Economics W.W. Norton (2000)

                                                World Bank.  World Development Report: Building Institutions for Markets                                                                       (2002)

Annual Report: International Monetary Fund

Annual Report: The World Bank,

Class Readings and assorted handouts.

 

Quiz:                                       There will be an hour quiz at the beginning of the October 7 class session. It is intended to give both you and me an early indicator of your understanding of the material covered to date. The quiz will consist of short essay answers and definitions. 

 

Grading:         Weights for the course grade will be as follows:[1]

                                                            Quiz                                         15%

                                                            Research Paper                       30%

                                                            Class Participation                 10%

                                                            Class Presentation                  10%                                                                                                                 Final Examination                  35%

 

Office Hours:                         I will be available before class at the hours given below or in my office by appointment.  My normal office hours for meeting will be 3:00 PM to 4:00 PM on most Mondays and 4:00 PM to 6:00 PM on most Tuesdays. Other times are possible.  For an appointment, please call or email ahead: My telephone is (703) 993-2886 (office) or (703) 273-2653 (Home). My university e-mail is address is jep@gmu.edu.  My office number is ARL 265. . 

Course Schedule:  (Subject to change)

 

August 26                    Introductions, scope and objectives of course, discussion of presentations and research papers. Basic concepts in international trade and the changing trade environment                                                 

                         Readings: Baker:  Chapter 1

                        Yergin:  Introduction, Chapters 1 to 2

 

September 3    NO CLASS

 

September 9:    Basics of the International Monetary System, Foreign Exchange:

 

                        Readings: Baker: Chapters 2 to 4 

                                                                          Yergin: Chapters 3 to 5

                                                                         

September 16:  PERSONAL PROFILE DUE

                        Direct Investment and Various Risks

 

                        Readings:   Baker:   Chapter 5 and 6

                                                                        Yergin: Chapters 6 to 8

           

September 23:  RESEARCH PAPER TOPIC DUE

                        Long-term Capital Management: The Firm’s Perspective   

 

                        Readings: Baker:     Chapters  7 and 8  

                        Yergin:    Chapters  9  to 11

                       

September 30:  International Banking: Institutions and Practices

 

                        Readings: Baker:  Chapters 9 and 10

                        Yergin: Chapters 12 and 13

 

October 7:       QUIZ AT BEGINNING OF CLASS

                        International Securities Markets

                                                Readings:        Baker:   Chapters 12 and 13

 

                                                                       

October 15:        (NOTE THE DATE CHANGE)

                        International Financial Crises: Contemporary Challenges to Gobalization

                                                Readings:            Krugman: pp.  1-82.

 

                                               

October 22:     International Financial Crises continued

                        Readings: Krugman: pp. 83-169

           

October 29:     Non-Bank Financial Institutions:

                        Readings: Baker: Chapter 11

                        World Bank Annual Report

                                                                         

November 4:                International Monetary and Finance Institutions and Their Policies

                                                Readings:            International Monetary Fund Annual Report

                                                                        Stiglitz: Chapter 1 to 4

 

November 11:  Research Paper Due: No Class

                                     Readings: Stiglitz: Chapters 5 to 9

                       

November 18:  Building Markets in Emerging Countries   

                        Readings: World Bank, 2002 World Development Report

                                                                          Chapters 1- 4

           

November 25:  Building and Accessing Domestic Financial Markets

                        Readings:    World Bank, 2002 World Development Report

                           Chapters 5- 9

 

December 2:    Subsovereign Credit Markets in Emerging Economies    

                        Readings:   Petersen & Freire, Subsovereign Markets

                          (to be handed out)

 

December 9:                FINAL  EXAM (Regular class time)


[1] Where letter or numeric grades are used, the following is the sequence of equivalence:

A+: 98-100, A: 92-97.9 A-: 90-91.9     B+: 88-89.9, B: 82-87.9,  B-: 80-81.9    C+: 78-79.9. C: 72-77.9, C-: 70-71.9