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International Money and Finance, 9th Edition

Book Description

International Money and Finance, Ninth Edition presents an institutional and historical overview of international finance and international money, illustrating how key economic concepts can illuminate real world problems.

With three substantially revised chapters, and all chapters updated, it functions as a finance book that includes an international macroeconomics perspective in its final section. It emphasizes the newest trends in research, neatly defining the intersection of macro and finance.

Successfully used worldwide in both finance and economics departments at both undergraduate and graduate levels, the book features current data, revised test banks, and sharp insights about the practical implications of decision-making.

  • Includes current events, such as the LIBOR and Greek crises
  • increases emphasis on countries other than the US
  • Minimizes prerequisites to encourage use by students from varied backgrounds

Table of Contents

  1. Cover image
  2. Title page
  3. Table of Contents
  4. Copyright
  5. Preface
  6. Acknowledgments
  7. To the Student
    1. Why Study International Finance?
    2. Finance and the Multinational Firm
    3. The Actors
    4. Plan of Attack
  8. Part I: The International Monetary Environment
    1. Chapter 1. The Foreign Exchange Market
      1. Abstract
      2. Foreign Exchange Trading Volume
      3. Geographic Foreign Exchange Rate Activity
      4. Spot Exchange Rates
      5. Currency Arbitrage
      6. Short-Term Foreign Exchange Rate Movements
      7. Long-Term Foreign Exchange Movements
      8. Summary
      9. Exercises
      10. Further Reading
      11. Appendix A Trade-Weighted Exchange Rate Indexes
      12. Appendix B The Top Foreign Exchange Dealers
    2. Chapter 2. International Monetary Arrangements
      1. Abstract
      2. The Gold Standard: 1880–1914
      3. The Interwar Period: 1918–1939
      4. The Bretton Woods Agreement: 1944–1973
      5. Central Bank Intervention During Bretton Woods
      6. The Breakdown of the Bretton Woods System
      7. The Transition Years: 1971–1973
      8. International Reserve Currencies
      9. Post Bretton Woods: 1973 to the Present
      10. The Choice of an Exchange Rate System
      11. Currency Boards and “Dollarization”
      12. Optimum Currency Areas
      13. The European Monetary System and the Euro
      14. Summary
      15. Exercises
      16. Further Reading
      17. Appendix A Current Exchange Rate Arrangements
    3. Chapter 3. The Balance of Payments
      1. Abstract
      2. Current Account
      3. Financing the Current Account
      4. Additional Summary Measures
      5. Transactions Classifications
      6. Current Account Disequilibria
      7. Balance of Payments Equilibrium and Adjustment
      8. The US Foreign Debt
      9. How Serious Is the US Foreign Debt?
      10. Summary
      11. Exercises
      12. Further Reading
  9. Part II: International Parity Conditions
    1. Chapter 4. Forward-Looking Market Instruments
      1. Abstract
      2. Forward Rates
      3. Swaps
      4. Futures
      5. Options
      6. Other Forward-Looking Instruments
      7. Summary
      8. Exercises
      9. Further Reading
    2. Chapter 5. Eurocurrency Markets and the LIBOR
      1. Abstract
      2. Reasons for Offshore Banking
      3. Interest Rate Spreads and Risk
      4. International Banking Facilities
      5. Offshore Banking Practices
      6. LIBOR
      7. The BBA LIBOR
      8. LIBOR Rigging
      9. The ICE LIBOR
      10. Summary
      11. Exercises
      12. Further Reading
    3. Chapter 6. Exchange Rates, Interest Rates, and Interest Parity
      1. Abstract
      2. Interest Rate Parity
      3. Effective Return on a Foreign Investment
      4. Deviations From Covered Interest Rate Parity
      5. Interest Rates and Inflation
      6. Exchange Rates, Interest Rates, and Inflation
      7. Expected Exchange Rates and the Term Structure of Interest Rates
      8. Summary
      9. Exercises
      10. Further Reading
      11. Appendix A What are Logarithms, and Why are They Used in Financial Research?
    4. Chapter 7. Prices, Exchange Rates, and Purchasing Power Parity
      1. Abstract
      2. Absolute Purchasing Power Parity
      3. The Big Mac Index
      4. Relative Purchasing Power Parity
      5. Time, Inflation, and PPP
      6. Deviations From PPP
      7. Overvalued and Undervalued Currencies
      8. Real Exchange Rates
      9. Summary
      10. Exercises
      11. Further Reading
      12. Appendix A The Effect on PPP by Relative Price Changes
  10. Part III: Risk and International Capital Flows
    1. Chapter 8. Foreign Exchange Risk and Forecasting
      1. Abstract
      2. Types of Foreign Exchange Risk
      3. The Foreign Exchange Risk Premium
      4. Market Efficiency
      5. Foreign Exchange Forecasting
      6. Fundamental Versus Technical Trading Models
      7. Summary
      8. Exercises
      9. Further Reading
    2. Chapter 9. Financial Management of the Multinational Firm
      1. Abstract
      2. Financial Control
      3. Cash Management
      4. Letters of Credit
      5. An Example of Trade Financing
      6. Intrafirm Transfers
      7. Capital Budgeting
      8. Summary
      9. Exercises
      10. Further Reading
      11. Appendix A Present Value
    3. Chapter 10. International Investment
      1. Abstract
      2. Portfolio Diversification
      3. Reasons for Incomplete Portfolio Diversification
      4. International Investment Opportunities
      5. The Globalization of Equity Markets
      6. Foreign Direct Investment
      7. Capital Flight
      8. Capital Inflow Issues
      9. Summary
      10. Exercises
      11. Further Reading
      12. Appendix A American Depositary Receipts
    4. Chapter 11. International Lending and Crises
      1. Abstract
      2. International Lending
      3. Causes of Financial Crises
      4. International Lending and the Great Recession
      5. International Lending and the Greek Debt Crisis
      6. IMF Conditionality
      7. The Role of Corruption
      8. Country Risk Analysis
      9. Summary
      10. Exercises
      11. Further Reading
  11. Part IV: Modeling the Exchange Rate and Balance of Payments
    1. Chapter 12. Determinants of the Balance of Trade
      1. Abstract
      2. Elasticities Approach to the Balance of Trade
      3. Elasticities and the J-Curve
      4. Currency Contract Period
      5. Pass-Through Analysis
      6. The Marshall–Lerner Condition
      7. The Evidence From Devaluations
      8. Absorption Approach to the Balance of Trade
      9. Summary
      10. Exercises
      11. Further Reading
    2. Chapter 13. The IS-LM-BP Approach
      1. Abstract
      2. The Internal and External Macroeconomic Equilibrium
      3. The IS Curve
      4. The LM Curve
      5. The BP Curve
      6. Equilibrium
      7. Monetary Policy Under Fixed Exchange Rates
      8. Fiscal Policy Under Fixed Exchange Rates
      9. Monetary Policy Under Floating Exchange Rates
      10. Fiscal Policy Under Floating Exchange Rates
      11. Using the IS-LM-BP Approach: The Asian Financial Crisis
      12. International Policy Coordination
      13. Summary
      14. Exercises
      15. Further Reading
      16. Appendix A The Open Economy Multiplier
    3. Chapter 14. The Monetary Approach
      1. Abstract
      2. Specie-Flow Mechanism
      3. The Monetary Approach
      4. The Monetary Approach to the Balance of Payments
      5. The Monetary Approach to the Exchange Rate
      6. The Monetary Approach for a Managed Floating Exchange Rate
      7. Sterilization
      8. Sterilized Intervention
      9. Summary
      10. Exercises
      11. Further Reading
    4. Chapter 15. Extensions and Challenges to the Monetary Approach
      1. Abstract
      2. The Role of News
      3. The PB Approach
      4. The Trade Balance Approach
      5. The Overshooting Approach
      6. The Currency Substitution Approach
      7. Recent Innovations to Open-Economy Macroeconomics
      8. Summary
      9. Exercises
      10. Further Reading
  12. Glossary
  13. Index