International Finance

The details
Colchester Campus
Postgraduate: Level 7
Monday 13 January 2025
Friday 21 March 2025
29 April 2024


Requisites for this module



Key module for

MSC L16012 International Economics,
MSC L160EB International Economics,
MECNL132 International Economics,
MECNLC32 International Economics (Including Placement Year),
MECNLC33 International Economics (Including Year Abroad)

Module description

Topics covered include intertemporal current account and balance of payments; uncertainty and international financial markets; imperfections in financial markets, capital account liberalization, direction of capital flows, global imbalances and sovereign risk, global imbalances; speculative attacks and currency crisis; contagion; nominal rigidities; exchange rate regimes.

Module aims

The aim of this module is:

  • To familiarise students with the analytical tools used in the field of international macroeconomics and finance.

Module learning outcomes

By the end of this module, students will be expected to be able to:

  1. Demonstrate a comprehensive understanding of how analytical tools can be used to understand the Current Account, the Trade Balance, and other important concepts in international macroeconomics and finance.

  2. Demonstrate a solid understanding of the concept of Real Exchange Rates and how they affect the Terms of Trade at which Economies engage with each other.

  3. Have acquired a critical appreciation of the role of International Financial Markets and of the imperfections which may prevent them from functioning efficiently.

  4. Critically understand the role of currencies and monetary policy in the context of international macroeconomics and finance.

Module information


Topic 1: Theories of the Current Account / Trade Balance 

  • Current account and trade balance

  • Intertemporal trade and gains from trade

  • Two-country endowment models

  • Endowment models with many periods

  • Models with investment

  • Effect of government spending

  • Demographics and the life cycle

Reading: Obstfeld/Rogoff chapters 1-3

Topic 2: The Real Exchange Rate and the Terms of Trade 

  • Purchasing power parity and law of one price

  • Models with tradeable and non-tradeable goods

  • Balassa-Samuelson effect

Reading: Obstfeld/Rogoff chapter 4

Topic 3: Uncertainty and International Financial Markets

  • Arrow-Debreu securities

  • International consumption and output correlations

  • International portfolio diversification

Reading: Obstfeld/Rogoff chapter 5

Topic 4: Imperfections in International Capital Markets

  • Models of currency crises

  • Models of sovereign debt crises

Reading: Obstfeld/Rogoff chapter 6

Topic 5: Money and Exchange Rates Under Flexible Prices

  • The Cagan model

  • Nominal exchange rate regimes

Reading: Obstfeld/Rogoff chapter 8

Topic 6: Money and Exchange Rates with Nominal Rigidities

  • The Dornbusch model

  • Exchange rate overshooting

Reading: Obstfeld/Rogoff chapter 9

Learning and teaching methods

This module will be delivered via:

  • One 2-hour lecture per week.
  • One 1-hour class per week.

Feedback for this module will occur through class meetings where we will go over the answers to problem sets and where you will be able to ask questions about your own method of solution; answers that will be posted on the website for the module that will give you written guidance on the appropriate method to approach the problems, assignments, and tests; and office hours where any additional questions can be addressed. You should be sure that you use these methods to understand how to improve your own performance.


The above list is indicative of the essential reading for the course.
The library makes provision for all reading list items, with digital provision where possible, and these resources are shared between students.
Further reading can be obtained from this module's reading list.

Assessment items, weightings and deadlines

Coursework / exam Description Deadline Coursework weighting
Exam  Main exam: In-Person, Open Book, 120 minutes during Summer (Main Period) 
Exam  Reassessment Main exam: In-Person, Open Book, 120 minutes during September (Reassessment Period) 

Exam format definitions

  • Remote, open book: Your exam will take place remotely via an online learning platform. You may refer to any physical or electronic materials during the exam.
  • In-person, open book: Your exam will take place on campus under invigilation. You may refer to any physical materials such as paper study notes or a textbook during the exam. Electronic devices may not be used in the exam.
  • In-person, open book (restricted): The exam will take place on campus under invigilation. You may refer only to specific physical materials such as a named textbook during the exam. Permitted materials will be specified by your department. Electronic devices may not be used in the exam.
  • In-person, closed book: The exam will take place on campus under invigilation. You may not refer to any physical materials or electronic devices during the exam. There may be times when a paper dictionary, for example, may be permitted in an otherwise closed book exam. Any exceptions will be specified by your department.

Your department will provide further guidance before your exams.

Overall assessment

Coursework Exam
50% 50%


Coursework Exam
0% 100%
Module supervisor and teaching staff
Dr Lukas Altermatt, email:
Lectures & Classes: Dr Lukas Altermatt
For further information, send an email message to



External examiner

Miss Maria Kyriacou
Available via Moodle
Of 30 hours, 28 (93.3%) hours available to students:
2 hours not recorded due to service coverage or fault;
0 hours not recorded due to opt-out by lecturer(s).


Further information

* Please note: due to differing publication schedules, items marked with an asterisk (*) base their information upon the previous academic year.

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