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International Finance
Hamza Ahmad Qureshi

International Economics

• What it constitutes?

• What are its subfields?

• What are the usual values and figures used to describe the
economic situation?

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Economic Indicators

Economic Indicators

• What are the sources for this data?

• Do we need to memorize these values?

• What to do with these values?

• What are the normal ranges? Max? Min? Average?

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Gross Domestic Product (Per Capita)

Inflation

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Unemployment

Government Budget Balances

Central Government Debt as % of GDP

2015 Data
Country/Region Budget Balance (%)

Euro Area −2.2

United States −2.5

China −2.9

Japan −7.0

India −4.1

Russia −1.5

Brazil −4.9

Pakistan -5.8
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Trade Balances

• How is it calculated?

• Is positive balance good?

• What happens when country runs a trade deficit?

• What happens when country runs a trade surplus?

Luxembourg 33
Russia 4.96
Japan -0.02
USA -3.11
India -0.54 Trade Balance as % of GDP

China 2.49
Bangladesh -6.54
Pakistan -7.42 10

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International Investment Position

• How is it calculated?

• How is it related to trade balance?

• How IIP is related International Debt?

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Net international investment position (NIIP) as % of GDP

Luxembourg 52.50
-39.60 Brazil
Russia 26.80
Japan 62.80
-64.90 USA
-14.00 India
China 12.90
-13.50 Bangladesh
-44.50 Pakistan 12

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International Institutions &

Exchange Rate Regimes

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IMF, WB and
Exchange Rates
• What was the traditional gold
standard for issuing currency
before 1920s?

• What led to end of the gold

standard?

• What was decided in Bretton

Woods Conference?

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IMF, WB and
Exchange Rates
• What is the purpose of IBRD
& IMF?

• What is the benefit of fixed

exchange rate?

• What was the Gold-Exchange

Standard?

• What are capital controls?

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IMF, WB and
Exchange Rates
• What was the Raison d’etre of IMF?

• Why did the Gold-Exchange Rate Collapsed?

• What is IMF’s main agenda today?

• What is Third World Debt Crisis?

• Why is IMF criticized so much?

• What is Washington Consensus?

• Is there a moral hazard in seeking IMF Loans?

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Exchange Rate Regimes

• Who decides how to issue currency?

• What is the modern standard for issuing currency?

• Fixed vs. Fluctuating exchange range. Which is better?

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Country De jure De facto arrangement

arrangement
Pakistan Floating Floating
Bangladesh Floating Stabilized arrangement
China Managed floating Crawl-like arrangement

India Floating Floating

USA Free Floating Free Floating
Japan Free Floating Free Floating
Russia Free Floating Free Floating
Brazil Floating Floating

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Business Cycles

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Business Cycles

• What is a bubble?

• What caused 2008 economic meltdown?

• What is a recession?

• What is a depression?

• What is a business cycle?

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Analyzing Business Cycles

• Monetarism

• Keynesian

• Austrian

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Assignment No. 1
a) Gather data for Pakistan’s any 1 economic indicator for the past 15 years. Mention your source.
i. Make historical chart
ii. In a brief paragraph describe the trend and highlight any major observations.
b) What is the difference between these two exchange rate arrangements? Write briefly and concisely.
i. Stabilized arrangement and Crawl Like arrangement
ii. Crawl peg and Crawl Like arrangement
c) Read the article “THE COVID-19 PANDEMIC IS FORCING A RETHINK IN MACROECONOMICS” and
answer the following questions.
i) Summarize three eras of macroeconomics according to this article. Focus on a) Who was/were the
pioneer(s) and in which years it began? b) What was/were the main goal(s)? c) Why and when it failed?
ii) What were the two major problems faced by policy makers post global financial crisis of 2007-2009.
iii) Post COVID, policy makers and economists are divided into three schools and differ regarding how to tackle
inflation, unemployment and GDP. Summarize each school’s approach.
Submit on TURNITIN. Deadline?
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