International Financial Management

Syllabus

Siegen, November 10-19, 2016

J. Markham Collins, PhD

All the readings except for those in the primary textbook, Eun, Cheol S., Resnick, Bruce G. (2015). International Financial Management, 7th Ed. McGraw-Hill (or Eun, Cheol S., Resnick, Bruce G. [2012]. International Financial Management, 6th Ed. McGraw-Hill,) and the article by Michael Porter can be found at this site:

http://www.box.com/shared/e46u22z8ud

There are assignments listed with the course and these should be done to discuss in class.

CASES:

Harvard Business Cases and the Porter article can be purchased through Harvard Business Online:

http://cb.hbsp.harvard.edu/cbmp/access/55973474

The name of our course in Harvard is Int Fin Mgt Siegen 2016.

Just go to that link and purchase the on-line course pack. It costs about € 15.00

I. Introduction to Trade, Global Investment, the International Monetary

System

Article:• Porter, “Competitive Advantage of Nations,” from Harvard. Read this prior to the start of

class.Book Chapters:

• Appleyard et al. (2010) – Chapter 20, pp. 476-506

• Eun & Resnick (2015) – Chapter 2, pp. 27-61

• Or Eun & Resnick (2012) – Chapter 2, pp. 29-63 Power Point lessons: Part 1

II. Exchange Rates and Parity Conditions

Book Chapters:• Appleyard, Chapter 20, pp. 476-506 & Chapter 28, pp. 713-738

• Shapiro (2010). Chapter 2, pp. 57-98

• Eun & Resnick (2015) – Chapter 5, pp. 112-139 & Chapter 6, pp. 140-172

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• Or Eun & Resnick (2012) – Chapter 5, pp. 112-138 & Chapter 6, pp. 139-171Power Point lessons: Part 2 through 4

III. The Optimal Currency Area and the Euro

Book Chapters:

• Shapiro, Chapter 3, pp. 99-134

• Appleyard, Chapter 29, pp. 739-774

Readings:

• Mundell (1961)

• Kenen (1966)

• McKinnon (1963)

• Mundell (1998)

• Mundell (1999)

• Vasiliauskaitė, et al. (2007)

• Kotil et al. (2009)

• Zhao and Kim (2009)

• Mundell (2002)

Power Point Lessons: Part 5 and 6.

IV. Managing Translation and Transaction Currency Exposure

Book Chapters:

• Shapiro, Chapter 10, pp. 354-402

• Eun & Resnick (2015), Chapter 8, pp. 198-224 & Chapter 10, pp. 245-263

• Or Eun & Resnick (2012), Chapter 8, pp. 197-226 & Chapter 10, pp. 248-265

Power Point Lessons: Part 7

Readings:

• Goldberg, S., & Drogt, E. (2008)

• Collins (2010)

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V. Economic Exposure

Book Chapters:

• Shapiro, Chapter 11, pp.403-449

• Eun & Resnick (2015), Chapter 9, pp. 225-244

• Eun & Resnick (2012), Chapter 9, pp. 227-247

Readings:

• Collins (2010)

Power Point Lessons: Part 8Case Studies:

• Lufthansa: To Hedge or Not to Hedge

• McDonalds Corporation’s UK Pound Exposure

• Porsche Exposed

VI. Foreign Direct investment

Book Chapters:

• Eun & Resnick (2015), Chapter 16, pp. 404-430

• Or Eun & Resnick (2012), Chapter 16, pp. 408-434

Readings:

• Shapiro (1985)

Power Point Lessons: Part 9

Listed References

Appleyard, D., Field, A., Cobb, S. (2009). International Economics. McGraw-Hill

Choi, J., & Jiang, C. (2009). Does multinationality matter? Implications of operational hedging for the exchange risk exposure. Journal of Banking & Finance, 33(11).

Collins, J. Markham (2010). Determinants of Economic Exchange Rate Exposure. Working Paper, 2010.

Eun, Cheol S., Resnick, Bruce G. (2009). International Financial Management. McGraw-Hill

Goldberg, S., & Drogt, E. (2008). Managing Foreign Exchange Risk. Journal of Corporate Accounting & Finance (Wiley), 19(2), 49-57.

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Kenen, Peter B. (1966). The Theory of Optimum Currency Area: An Eclectic View. In Monetary Problems of the International Economy, Mundell, Robert A. and Swoboda, Alexander K. Eds. University of Chicago Press, 1969.

Kotil, Erdogan; Konur, Fatih; Çakici, Kemal (2009). Assessment of the Euro Zone According to the Criteria of the Theory of Optimum Currency Areas. International Research Journal of Finance & Economics, Issue 27, p29-39, 11p

McKinnon, Ronald I (1963). Optimum Currency Areas. American Economic Review, Vol. 53 Issue 4, p717, 9p

Mundell, Robert A. (1961). A Theory of Optimum Currency Areas. American Economic Review, Vol. 51Issue 4, p657, 9p

Mundell, Robert A. (1998). What the Euro Means for the Dollar and the International Monetary System. Atlantic Economic Journal, Sep98, Vol. 26 Issue 3, p227, 11p

Mundell, Robert A. (1999). The Euro: How Important? CATO Journal, Vol. 18 Issue 3, p441, 4p

Mundell, Robert A. (2002). Does Asia Need a Common Currency Market? Pacific Economic Review, Vol. 7 Issue 1, p3, 10p

Shapiro, Alan C. (1985). Corporate Strategy and the Capital Budgeting Decision, Midland Corporate

Finance Journal, Spring 1985. Reprinted in The Revolution in Corporate Finance (editors, Joel Stern and

Donald Chew), Basil Blackwell, 1998

Shapiro, Alan C. (2010). Multinational Financial Management. John Wiley & Sons, Inc.

Vasiliauskaitė, A., Vitkauskas, M. (2007). The Attainability Analysis to Complete requirements of Optimum Currency Area with EU. Economics & Management, 2007, p261-268, 8p

Quah, Chee-Heong (2009). The Feasability of East Asian Monetary Union as an Optimum Currency Area. International Journal of Asia-Pacific Studies, Vol. 5 Issue 2, p65-90, 26p

Zhao, X., Kim, Y. (2009). Is the CFA Franc Zone an Optimum Currency Area? World Development, Vol.37 Issue 12, p1877-1886, 10p

Recommended Readings

Cesarano, F. (2006). The Origins of the Theory of Optimum Currency Areas. History of Political Economy, Winter2006, Vol. 38 Issue 4, p711-731, 21p

Dellas, Harris; Tavlas, George S. (2009). An optimum-currency-area odyssey. Journal of International Money & Finance, Vol. 28 Issue 7, p1117-1137, 21p

Frankel, Jeffrey A.; Rose, Andrew K. (1998). The Endogeneity of the Optimum Currency Area Criteria, Economic Journal, Vol. 108 Issue 449, p1009-1025, 17p

Frankel, Jeffrey; Rose, Andrew (2002). An Estimate of the Effect of Common Currencies on Trade and Income, Quarterly Journal of Economics, Vol. 117 Issue 2, p437-466, 30p

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Hutson, Elaine; O’Driscoll, Anthony (2010). Firm-level exchange rate exposure in the Eurozone, International Business Review, Vol. 19 Issue 5, p468-478, 11p

Kenen, Peter B. (1997). Common currencies versus currency areas. American Economic Review, Vol. 87 Issue 2, p211, 3p

Kenen, Peter B. (2010). There Was No Analytical Alternative to the Theory of Optimum Currency Areas.Econ Journal Watch, Vol. 7 Issue 1, p73-75, 3p

Kenen, Peter B. (2003). Making the Case for The Euro. International Economy, Vol. 17 Issue 1, p51, 4p

Makar, Stephen D.; Huffman, Stephen P. (2008). UK Multinationals' Effective Use of Financial Currency-Hedge Techniques: Estimating and Explaining Foreign Exchange Exposure Using Bilateral Exchange Rates, Journal of International Financial Management & Accounting, Vol. 19 Issue 3, p219-235, 17p

McKinnon, Ronald I. (1994). A Common Monetary Standard or a Common Currency for Europe? Fiscal lessons from the United States, McKinnon, Ronald I. Scottish Journal of Political Economy, Vol. 41 Issue4, p337, 21p

McKinnon, R. (2002). Optimum Currency Areas and the European Experience, Economics of Transition, Vol. 10 Issue 2, p343-364, 22p

McKinnon, Ronald I. (2002). Money and Finance on the Periphery of the International Dollar Standard, International Journal of Finance & Economics, Vol. 7 Issue 2, p87-96, 10p

McKinnon, Ronald I. (2004). Optimum Currency Areas and Key Currencies: Mundell I versus Mundell II, Journal of Common Market Studies, Vol. 42 Issue 4, p689-715, 27p

Mishra, R. K., Sharma, C. (2010). Real Exchange Rate Behavior and Optimum Currency Area in East Asia: Evidence from Generalized Purchasing Power Parity, International Review of Financial Analysis, Vol. 19 Issue 3, p205-213, 9p

Mundell, Robert A. (1960). The Monetary Dynamics of International Adjustment under Fixed and Flexible Exchange rates, Quarterly Journal of Economics, Vol. 74 Issue 2, p227-257, 31p

Mundell, Robert A. (1973). Uncommon Arguments for Common Currencies, In H.G. Johnson and A.K. Swoboda, eds., The Economics of Common Currencies (115-132). Harvard University Press, Cambridge.

Mundell, Robert A. (2000). Currency Areas, Volatility and Intervention. Journal of Policy Modeling, Vol.22 Issue 3, p281, 19p

Ozer, I., Ozkan, I., Aktan, Okan H. (2007). Optimum Currency Areas Theory: An Empirical Application to Turkey, South East European Journal of Economics & Business; Issue 4, p75, 14p

Shapiro, A., & Rutenberg, D. (1976). Managing Exchange Risks in a Floating World, Financial Management (1972), 5(2), 48-58.

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Silvestre, João; Mendonça, António (2007). The Endogeneity of Optimum Currency Areas Criteria: SomeEvidence from the European Union and Portugal. International Advances in Economic Research, Vol. 13 Issue 1, p1-18, 18p

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