I. INTERNATIONAL PAYMENTS AND EXCHANGE
1. Keeping Up with a Changing World-Trade Flows, Capital Flows, and the Balance of Payments
Why it is important to understand international money and finance
International Economic Integration: The Importance of Global Trade and Financial Markets
The Balance of Payments
Examples of International Transactions and How they Affect the Balance of Payments
The Capital Account and the International Flow of Assets
Relating the Current Account Balance and Capital Flows
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
2. The Market for Foreign Exchange
Exchange rates and the market for foreign exchange
Composite Currencies
Foreign Exchange Arbitrage
The Demand for and Supply of Currencies
Purchasing Power Parity
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
3. Exchange-Rate Systems, Past to Present
Exchange Rate Systems
The Gold Standard
The Bretton Woods System
The Flexible Exchange Rate System
Other Forms of Exchange Arrangements Today
Fixed or Floating Exchange Rates?
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
II. INTERNATIONAL FINANCIAL INSTRUMENTS, MARKETS, AND INSTITUTIONS
4. The Forward Currency Market and International Financial Arbitrage
Foreign Exchange Risk
The Forward Exchange Market
International Financial Arbitrage
Uncovered Interest Parity
Foreign Exchange Market Efficiency
International Financial Markets
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
5. Interest Yields, Interest-Rate Risk, and Derivative Securities
Interest Rates
Interest Rate Differentials-Excess Returns and Failure of Uncovered Interest Parity
Real Interest Rates and Real Interest Parity
Hedging, Speculation and Derivative Securities
Common Derivative Securities and Their Risks
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
6. International Banking, Central Banks, and Supranational Financial Policymaking Institutions
International Dimensions of Financial Intermediation
Global Payments and Financial System Risks
Bank Regulation and Capital Requirements
Central Banks
What do Central Banks Do?
Supranatural Financial Policymaking Institutions
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
7. The International Financial Architecture and Emerging Economies
International Capital Flows
Capital Market Liberalization and International Financial Crises
Exchange Rate Regimes and Financial Crises
Does the International Financial Architecture Need a Redesign?
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
III. EXCHANGE-RATE AND BALANCE-OF-PAYMENTS DETERMINATION
8. Traditional Approaches to Balance-of-Payments and Exchange-Rate Determination
Common Characteristics of the Traditional Approaches
Exports, Imports, and the Demand for and Supply of Foreign Exchange
The Elasticities Approach
The Absorption Approach
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
9. Monetary and Portfolio Approaches to Balance-of-Payments and Exchange-Rate Determination
Central Bank Balance Sheets
Managed Exchange Rates: Foreign Exchange Interventions
The Monetary Approach to Balance of Payments and Exchange Rate Determination
Applying the Monetary Approach: A Two Country Setting
The Portfolio Approach to Exchange Rate Determinatin
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
IV. OPEN ECONOMY MACROECONOMICS AND POLICY ANALYSIS
10. An Open Economy Framework
Measuring An Economy's Performance: Gross Domestic Product and Price Indexes
Real Income and Expenditures: The IS Schedule
The Market for Real Money Balances: The LM Schedule
The Balance of Payments: The BP Schedule and the IS-LM-BP Model
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
11. Economic Policy with Fixed Exchange Rates
The Objectives of Policy
The Role of Capital Mobility
Fixed Exchange Rates and Imperfect Capital Mobility
Fixed Exchange Rates and Perfect Capital Mobility
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
12. Economic Policy with Floating Exchange Rates
Floating Exchange Rates and Imperfect Capital Mobility
Floating Exchange Rates and Perfect Capital Mobility
Fixed Versus Floating Exchange Rates
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Reading
13. The Price Level, Real Output, and Economic Policymaking
Aggregate Demand
Aggregate Supply
Rules Versus Discretion in Economic Policymaking
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Readings
V. DOMESTIC AND MULTINATIONAL POLICYMAKING IN A GLOBAL ECONOMY
14. Domestic Economic Policymaking in a Global Economy
The Policy Assignment Problem
Exchange Rate Responses to Policy Actions with Sticky Wages and Prices-Exchange Rate Overshooting
Openness and the Output Inflation Relationship- How Globalization Alters the Effects of Policies
Openness and Inflation
New Open Economy Macroeconomics and Its Policy Implications
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Readings
15. Policy Coordination, Monetary Union, and Target Zones
International Interdependence
Perfect Capital Mobility Revisited: Can International Policy Coordination Pay?
The Pros and Cons of International Policy Coordination
The Economics of Monetary Unions
Vehicle Currencies
Splitting the Difference: Exchange Rate Target Zones
Chapter Summary
Questions and Problems
Online Application
Selected References and Further Readings
