The economics of foreign exchange and global finance

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This volume integrates the theory of foreign exchange rate determination with the practice of global finance, illustrating how theory informs practice and vice versa in a highly interconnected market. It covers essential topics in international monetary theory, foreign exchange markets, international financial management, and investment analysis, addressing real-world problems by offering solutions for policy issues and practical management tasks. This approach enhances the reader's understanding of theory and sharpens the analytical framework. The new edition features two additional chapters, updates to most chapters from the first edition, and incorporates recent developments, materials, and data. One new chapter focuses on the portfolio balance approach to exchange rate determination, complementing major models from the first edition, such as the Mundell-Fleming model, the flexible price monetary model, the Dornbusch model, and the real interest rate differential model. This comprehensive coverage of exchange rate theories is further enriched by a second new chapter discussing balance of payments issues and their interactions with exchange rates and policies.