IPEC4377 - Politics of International Finance

IPEC 4377 Politics of International Finance (3 semester credit hours) When explaining financial crises, economic theory is often confronted with puzzles such as: A speculative attack was launched against the currency of one country, while a neighboring country with virtually identical economic conditions remained untouched. When economic explanations fall short, analyzing the role of politics in finance can provide answers. This course aims to provide such answers by analyzing the interplay between politics and finance. The first section of the course deals with the way stock markets and banks operate in different countries. The second section analyzes how politics affects exchange rates and capital mobility. The final section of the course investigates sovereign debt and lending. Within these broad topics we will ask and answer questions such as "What factors explain how stock markets respond to political events?", "How do political institutions shape the decision of firms to issue equity rather than use banks?", "Why did investors loose confidence in Thailand's currency but not Vietnam?", and "Why did Argentina decide to default on its debt while neighboring Brazil did not?" This course is particularly suited for students interested in careers in business or government. Future investors and government officials will need the skills necessary to analyze the two-way relationship of politics affecting finance and finance shaping politics. (3-0) R