Course program
The course discusses how the financial system and financial dynamics can help or hinder the process of human development. To this aim, it first introduces the students to the notion(s) of development and the social role(s) of money and finance, and it then discusses how financial actors and practices might have an impact on the real economy, on the environment, and on social and political dynamics. During the course, a substantial number of lecture hours are devoted to seminars from practictioners and researchers in the field of development finance.
Syllabus:
• A brief summary of international monetary economics and international finance
• Flows of funds representation of the economy, stock-flow consistency in an open economy; the balance of payments; the international investment position. Public, private, and foreign debt.
• The international monetary system; regional and global institutions; the role of the dollar.
• Open-economy macroeconomics; economic policy in an open economy; the trilemma of monetary economics, and Rodrik’s globalization trilemma.
• Concepts of development
• A short history of economic thought on development;
• Contemporary economic theories of growth and structural change;
• Multidimensional development: measurement issues and the Sustainable Development Goals:
• “Shared prosperity”: growth, poverty, and inequality;
• Civic and political development: rule of law, sovereignty, democracy, fairness and justice.
• Environmental sustainability: resource depletion, loss of biodiversity, climate change.
• Fundamentals of financial economics
• The social roles of the financial system: allocative, monetary, and risk management;
• Efficiency of the real and financial markets: allocative and informative efficency;
• Institutions, instruments, and actors of the global financial system. The global architecture of finance for development.
• Finance for development
• The real effect of financial developments;
• The private and public financing of development goals;
• Financial and economic crises, and the obstacles to and difficulties of development.
Prerequisites
To fully understand the contents of the course, a basic knowledge of economics, economic statistics, and mathematics are indispensable. Concerning economics, students are expected to know intermediate macroeconomics (equilibrium in the real, labour, money and financial markets, fiscal and monetary policy, international economics). Concerning economic statistics, students are expected to know basic concepts related to the definition and estimates of national accounts, including the balance of payments. Concerning mathematics, students are assumed to know the basics of calculus and constrained maximization. Further competences in law, political science, and/or sociology would be useful, as well as students’ acquaintance with contemporary economic and political developments.
Books
Ocampo J.A., Kregel J., Griffith-Jones S. (2007), International Finance and Development, New York: United Nations.
Salvatore D. (2016), International Economics, New York: John Wiley & Sons, chapters 13-21.
Spratt S. (2011), Development Finance, Abingdon: Routledge.
Frequency
Class attendance is highly recommended. Students who cannot attend the course regularly are advised to contact the professor.
Exam mode
For students who attend all classes, the exam consists of two projects based on the application to real world data of the theories learnt in class.
For students who do not attend all classes, the final exam consists of a written and an oral examination. The written test consists of 3-4 open-ended questions, of which one or more may be in the form of exercises. The subsequent oral examination consists of a discussion of the written test and of one or more further topics.
Bibliography
Ocampo J.A., Kregel J., Griffith-Jones S. (2007), International Finance and Development, New York: United Nations.
Salvatore D. (2016), International Economics, New York: John Wiley & Sons, chapters 13-21.
Spratt S. (2011), Development Finance, Abingdon: Routledge.
Lesson mode
Lectures alternate between presentations of the main theories and models, their application to real-world data, and exercises.
