International Money and Finance

Part I: The International Monetary Environment

Chapter 1. The Foreign Exchange Market

• Abstract
• Foreign Exchange Trading Volume
• Geographic Foreign Exchange Rate Activity
• Spot Exchange Rates
• Currency Arbitrage
• Short-Term Foreign Exchange Rate Movements
• Long-Term Foreign Exchange Movements
• Summary
• Exercises
• Further Reading
• Appendix A Trade-Weighted Exchange Rate Indexes
• Appendix B The Top Foreign Exchange Dealers

Chapter 2. International Monetary Arrangements

• Abstract
• The Gold Standard: 1880–1914
• The Interwar Period: 1918–1939
• The Bretton Woods Agreement: 1944–1973
• Central Bank Intervention During Bretton Woods
• The Breakdown of the Bretton Woods System
• The Transition Years: 1971–1973
• International Reserve Currencies
• Post Bretton Woods: 1973 to the Present
• The Choice of an Exchange Rate System
• Currency Boards and “Dollarization”
• Optimum Currency Areas
• The European Monetary System and the Euro
• Summary
• Exercises
• Further Reading
• Appendix A Current Exchange Rate Arrangements

Chapter 3. The Balance of Payments

• Abstract
• Current Account
• Financing the Current Account
• Additional Summary Measures
• Transactions Classifications
• Current Account Disequilibria
• Balance of Payments Equilibrium and Adjustment
• The US Foreign Debt
• How Serious Is the US Foreign Debt?
• Summary
• Exercises
• Further Reading

Part II: International Parity Conditions

Chapter 4. Forward-Looking Market Instruments

• Abstract
• Forward Rates
• Swaps
• Futures
• Options
• Other Forward-Looking Instruments
• Summary
• Exercises
• Further Reading

Chapter 5. Eurocurrency Markets and the LIBOR

• Abstract
• Reasons for Offshore Banking
• Interest Rate Spreads and Risk
• International Banking Facilities
• Offshore Banking Practices
• LIBOR
• The BBA LIBOR
• LIBOR Rigging
• The ICE LIBOR
• Summary
• Exercises
• Further Reading

Chapter 6. Exchange Rates, Interest Rates, and Interest Parity

• Abstract
• Interest Rate Parity
• Effective Return on a Foreign Investment
• Deviations From Covered Interest Rate Parity
• Interest Rates and Inflation
• Exchange Rates, Interest Rates, and Inflation
• Expected Exchange Rates and the Term Structure of Interest Rates
• Summary
• Exercises
• Further Reading
• Appendix A What are Logarithms, and Why are They Used in Financial Research?

Chapter 7. Prices, Exchange Rates, and Purchasing Power Parity

• Abstract
• Absolute Purchasing Power Parity
• The Big Mac Index
• Relative Purchasing Power Parity
• Time, Inflation, and PPP
• Deviations From PPP
• Overvalued and Undervalued Currencies
• Real Exchange Rates
• Summary
• Exercises
• Further Reading
• Appendix A The Effect on PPP by Relative Price Changes

Part III: Risk and International Capital Flows

Chapter 8. Foreign Exchange Risk and Forecasting

• Abstract
• Types of Foreign Exchange Risk
• The Foreign Exchange Risk Premium
• Market Efficiency
• Foreign Exchange Forecasting
• Fundamental Versus Technical Trading Models
• Summary
• Exercises
• Further Reading

Chapter 9. Financial Management of the Multinational Firm

• Abstract
• Financial Control
• Cash Management
• Letters of Credit
• An Example of Trade Financing
• Intrafirm Transfers
• Capital Budgeting
• Summary
• Exercises
• Further Reading
• Appendix A Present Value

Chapter 10. International Investment

• Abstract
• Portfolio Diversification
• Reasons for Incomplete Portfolio Diversification
• International Investment Opportunities
• The Globalization of Equity Markets
• Foreign Direct Investment
• Capital Flight
• Capital Inflow Issues
• Summary
• Exercises
• Further Reading
• Appendix A American Depositary Receipts

Chapter 11. International Lending and Crises

• Abstract
• International Lending
• Causes of Financial Crises
• International Lending and the Great Recession
• International Lending and the Greek Debt Crisis
• IMF Conditionality
• The Role of Corruption
• Country Risk Analysis
• Summary
• Exercises
• Further Reading

Part IV: Modeling the Exchange Rate and Balance of Payments

Chapter 12. Determinants of the Balance of Trade

• Abstract
• Elasticities Approach to the Balance of Trade
• Elasticities and the J-Curve
• Currency Contract Period
• Pass-Through Analysis
• The Marshall–Lerner Condition
• The Evidence From Devaluations
• Absorption Approach to the Balance of Trade
• Summary
• Exercises
• Further Reading

Chapter 13. The IS-LM-BP Approach

• Abstract
• The Internal and External Macroeconomic Equilibrium
• The IS Curve
• The LM Curve
• The BP Curve
• Equilibrium
• Monetary Policy Under Fixed Exchange Rates
• Fiscal Policy Under Fixed Exchange Rates
• Monetary Policy Under Floating Exchange Rates
• Fiscal Policy Under Floating Exchange Rates
• Using the IS-LM-BP Approach: The Asian Financial Crisis
• International Policy Coordination
• Summary
• Exercises
• Further Reading
• Appendix A The Open Economy Multiplier

Chapter 14. The Monetary Approach

• Abstract
• Specie-Flow Mechanism
• The Monetary Approach
• The Monetary Approach to the Balance of Payments
• The Monetary Approach to the Exchange Rate
• The Monetary Approach for a Managed Floating Exchange Rate
• Sterilization
• Sterilized Intervention
• Summary
• Exercises
• Further Reading

Chapter 15. Extensions and Challenges to the Monetary Approach

• Abstract
• The Role of News
• The PB Approach
• The Trade Balance Approach
• The Overshooting Approach
• The Currency Substitution Approach
• Recent Innovations to Open-Economy Macroeconomics
• Summary
• Exercises
• Further Reading