CONTENTS ______________________________________________________________ 1 Introduction The chapters 2 Some Basic Concepts in International Finance 2.1 The exchange rate 2.2 The balance of payments accounts 2.3 Purchasing power parity 2.4 Floating exchange rates: prospect and retrospect 2.5 Exchange rate volatility 3 Spot and Forward Exchange Rates: Some more Basic Ideas 3.1 The elasticities view of the exchange rate 3.2 The forward exchange rate, arbitrage and pure speculation 3.3 Covered interest parity - empirical evidence 3.4 Uncovered interest parity - empirical evidence 3.5 Real interest rate parity - empirical evidence 4 Income and the Balance of Payments 4.1 The foreign trade multiplier 4.2 The equilibrium real exchange rate 4.3 An early view of economic management 4.4 The assignment problem 4.5 The absorption approach 4.6 Intertemporal utility maximization and the current account 4.7 Twin deficits 4.8 Foreign repercussions with no capital mobility 5 Macroeconomics in an Open Economy: The Mundell-Fleming Model and Some Extensions Introduction 5.1 The 'base-line' Mundell-Fleming model 5.2 The large country case 5.3 Insulation and the MF model 5.4 Imperfect capital mobility and the MF model 5.5 Regressive expectations and monetary-fiscal policy 5.6 The J curve and regressive expectations 5.7 Wealth effects 5.8 Aggregate supply, the real balance effect and the exchange rate in the MF model 5.9 Summary and conclusions 6 International Policy Co-ordination 6.1 The two country Mundell-Fleming model and macroeconomic interdependence 6.2 The potential gains from policy co-ordination 6.3 Dynamic games, and the sustainability and reputation credibility of international co-operation 6.4 Some evidence on the potential benefits of co-ordination 6.5 Potential impediments to policy co-ordination and the appropriate form of such co-ordination 7 Purchasing Power Parity: Theory and Evidence 7.1 The absolute and relative purchasing power parity concepts 7.2 The efficient markets view of purchasing power parity 7.3 Further interpretation of purchasing power parity 7.4 Some further criticisms of purchasing power parity 7.5 The empirical validity of purchasing power parity 7.6 Concluding comments 8 The Monetary Approach to the Balance of Payments 8.1 What is so different about the monetary approach? 8.2 The global monetarist model *8.3 Sterilization and the reserve offset coefficient *8.4 The international transmission of inflation: some evidence 9 The Monetary View of Exchange Rate Determination Introduction 9.1 The asset approach to the exchange rate 9.2 The flex-price monetary approach to the exchange rate 9.3 Introducing expectations 9.4 Rational speculative bubbles 9.5 The sticky-price monetary approach 9.6 Currency substitution *9.5 Empirical evidence on the monetary model *9.8 More empirical evidence *9.9 Empirical tests for the existence of speculative bubbles 9.10 Concluding comments 10 The Monetary Model: Further Applications - real shocks and exchange regime volatility 10.1 Introduction 10.2 The general equilibrium monetary model 10.3 The monetary model and exchange regime volatility 10.4 Empirical evidence on the general equilibrium approach 10.5 Concluding comments 11 The Portfolio Balance Approach to the Determination of the Exchange Rate 11.1 The portfolio balance model 11.2 Open market purchase of bonds: monetary policy 11.3 An increase in the supply of domestic bonds: fiscal policy 11.4 Asset preference shift *11.5 Econometric evidence on the portfolio balance approach 11.6 Summary and concluding comments 12 Spot and Forward Exchange Rates and the Efficient Markets Hypothesis 12.1 Spot and forward exchange rates 12.2 The efficient markets hypothesis and the forward market for foreign exchange *12.3 Econometric estimation of the efficient market hypothesis *12.4 A risk premium story to explain why β may not by unity *12.5 Empirically implementing equation 11.20 *12.6 Concluding comments 13 Expectational Explanations for the Rejection of the Efficient Markets Hypothesis and the "News" 13.1 Peso effects, rational speculative bubbles and econometric inference 13.2 Technical analysis and chartism *13.3 Survey data, expectations and risk 13.4 Market microstructure *13.5 The news approach to exchange rate modeling *13.6 Empirical studies of the news approach 13.7 The noise-trader paradigm 14 Currency Crises and Speculative Attack 14.1 Recent international financial crises 14.2 First generation speculative attack models 14.3 Second generation models 14.4 Econometric estimates of speculative attack models 14.5 Microeconomic indicators 14.6 Contagion 14.7 Interest rate, foreign exchange and credit risk 14.8 Possible policy responses 15 Exchange Rate Target Zones and 'Dirty Floating" 15.1 Target zones 15.2 Dirty floating 16 The International Gold Standard: Theory and Experience 16.1 Credibility and exchange rate regimes 16.2 The gold standard during the inter-war period 17 The Dollar Standard Today and During the Bretton Woods Era 17.1 The Bretton Woods system to 1971 17.2 The dollar standard 17.3 Reserve creation and the US and world price levels 17.4 The East Asian dollar standard 18 Monetary Unions 18.1 Benefits and costs of a monetary area: seminal ideas 18.2 Melitz and the covariance of equilibrium real exchange rates approach 18.3 Bayoumi's general equilibrium model of the optimum currency area 18.4 Ad hoc benefits of a pegged exchange rate or common currency 18.5 Estimating shocks 18.6 Fiscal federalism 19 International Capital Flows 19.1 International money and capital flows 19.2 Eurobanking 19.3 Regulation: the Basle capital accord 19.4 Measuring international capital mobility 19.5 International bond markets 20 Developing Countries, Balance of Payments Adjustment and the IMF 20.1 Developing Country exchange rate arrangements: to peg or not to peg? 20.2 Liberalization, the equilibrium real exchange rate and economic policy 20.3 The IMF: its role 20.4 The IMF's monetary approach to the balance of payments 20.5 New structuralist arguments against IMF adjustment policies 21 The Order of Liberalization in Developing Countries 21.1 Distortions and economic performance 21.2 Unhappy experience with financial liberalization 21.3 The order of liberalization 22 Exchange Rates and Transition Economies 22.1 Economic reforms 22.2 Microeconomic-macroeconomic equilibrium 22.3 Shocks to the equilibrium real exchange rate 22.4 The real exchange rate in asset market equilibrium 22.5 On knowing the correct real exchange rate 22.6 Choice of an exchange rate regime by a TE 23 International Debt 23.1 The debt problem 23.2 Growth of international debt 23.3 Debt and economic growth 23.4 Capital flight 23.5 Governmental and national foreign indebtedness 23.6 The lenders' trap 23.7 Some debt-reform proposals 23.8 An international debt facility 24 International Monetary Reform 24.1 Financing or adjustment? 24.2 Designing an international monetary system 24.3 Yen and DM currency blocs 24.4 Costs and benefits of flexible exchange rates 24.5 Alternative plans for the reform of the international monetary system