International Finance

What you will learn

This free video course covers some of the most complex but also important topics in economics. How are exchange rates determined? When if ever are ongoing trade deficits harmful? Are fixed or floating exchange rates better? What are the roots of the euro crisis and what resolution can we expect? Does China manipulate its exchange rate and if so how does that matter? We cover all of these topics and more, with an eye toward what a person really might want to know. There is no use of mathematics in this course beyond the very basic.

The interesting thing about international finance is that even a lot of professional economists don’t understand it very well, unless they have specialized in the area. If you complete this course, you’ll probably know a lot which they don’t! We encourage you to dive in at your own pace and watch videos more than once if it's helpful.

1. Introduction to International Trade and Finance

Balance of Payments

Purchasing Power Parity

David Hume on the Balance of Trade

Isaac Gervaise

2. Exchange Rates

Real Exchange Rates

Real and Nominal Exchange Rates

Are Devaluations Contractionary?

Forward Exchange Rates

Covered Interest Parity

Uncovered Interest Parity and the Carry Trade

Speculative Attacks

The “Peso Problem”

Long Swings in Exchange Rates

Swiss Franc Peg

Bela Balassa

3. Currency Issues

The Classical Gold Standard

Gold Exchange Standard

Bretton Woods

Reserve Currencies

Safe Haven Currencies

Capital Controls

Currency Manipulation

Chinese Currency Manipulation

Borrowing in Your Own Currency

4. The Euro Crisis

The Three Sides of the Crisis

The Case for Optimism

The Case for Pessimism

European Central Bank

The Bailout Funds

Why are high bond yields a problem?

The Italian Crisis of 2013

The costs of leaving the Eurozone

Remarks on individual countries

Currency union collapse in history

Indicators for Eurozone progress

Life on the precipice

Will austerity work?

Effects on other multilateral agreements

Optimum currency areas

Optimum currency areas and the Euro

Why is the Euro so bland?

Tyler Cowen lecture at the Bruno Leoni Institute (Optional)

Understanding the Eurocrisis (Optional)

Iceland: Causes of the Crisis

Iceland: Collapse

5. International Trade Overview

Trade Imbalances

Dark Matter

The “Dutch Disease”

Home Bias

Introduction to Mercantilism

Adam Smith on Mercantile Systems

Adam Smith on Mercantile Conclusions

6. Crises and Responses to Them

Asian Financial Crisis of 1997

Mexico and the 2008 Financial Crisis

Sudden Stops