The course provides a systematic introduction to international financial theories. It covers the concepts related to exchange rates and foreign exchange markets, theories of exchange rate determination, and the framework for exchange rate analysis in detail. It will explain how a country’s economy is recorded in the balance of payments in an open economy. It will also discuss the economic significance of the balance of payments and explore the theoretical benefits of financial openness. The course will also introduce macroeconomic policy models in open economies, the evolution of exchange rate policy and the international monetary system, and the causes and theories of exchange rate crises. Additionally, it will examine the theoretical and practical development of international financial cooperation, with the help of the history of China–ASEAN financial collaboration.
Part One: Exchange Rates and Exchange Rate Theories This section introduces the concept of exchange rates, theories such as Purchasing Power Parity (PPP) and Uncovered Interest Parity (UIP), and the exchange rate systems of various countries, illustrated with real-world cases from China and ASEAN member states.
Part Two: Balance of Payments Theory This section explains the concepts of the balance of payments and financial openness, along with the relevant theories. It also discusses the characteristics of balance of payments in the China–ASEAN region, taking into account regional industrial chain cooperation.
Part Three: Macroeconomic Policy in Open Economies This section presents theories of macroeconomic policy regulation in open economies. Drawing on real cases from China, it explores the experience of financial liberalization and macroeconomic growth during the reform and opening-up process.
Part Four: Exchange Rate Crisis Theories This section provides an overview of the historical development of the international monetary system and theories of exchange rate crises, with a case study of the Southeast Asian financial crisis to analyze historical lessons.
The teaching approach is theory-focused, supported by case-based instruction using historical data and events. In addition to completing in-class assignments, students are expected to research and analyze real-world international financial events from everyday life to deepen their understanding of the theories covered in the course.
