Principles of International Finance and Open Economy Macroeconomics
Theories, Applications, and Policies
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Principles of International Finance and Open Economy Macroeconomics: Theories, Applications, and Policies presents a macroeconomic framework for understanding and analyzing the global economy from the perspectives of emerging economies and developing countries. Unlike most macroeconomic textbooks, which typically emphasize issues about developed countries while downplaying issues related to developing countries, this book emphasizes problems in emerging economies, including those in Latin American countries. It also explains recent developments in international finance that are essential to a thorough understanding of the effects and implications of the recent financial crisis.
Key Features
- Concentrates on developing country perspectives on International Finance and the Economy, including those in Latin American countries
- Provides case studies and publicly available data allowing readers to explore theories and their applications
- Explains recent developments in international finance that are essential to a thorough understanding of the effects and implications of the recent financial crisis
- Proposes a unified mathematical model accessible to those with basic mathematical skills
Readership
Upper-division undergraduate and graduate level students working in international macroeconomics.
Table of Contents
- Foreword
- Preface
- How to Use This Book
- Acknowledgments
- 1. Introduction
- 1.1 Mathematical Modeling
- 1.2 Book Structure
- Part I: Definitions
- Part I. Definitions
- 2. How to Measure International Transactions
- 2.1 Balance of Payments
- 2.2 National Accounts
- 2.3 Balance of Payments Equilibrium
- 2.4 Open Economy Models
- Mathematical Appendix
- 2.5 Exercises
- 3. The Foreign Exchange Market
- 3.1 The Nominal Exchange Rate
- 3.2 The Goods and Services Market: The Real Exchange Rate
- 3.3 The Assets Market: Interest Rate Parity Conditions
- Mathematical Appendix
- 3.4 Exercises
- Part II: Current Account and Real Exchange Rate
- Part II. Current Account and Real Exchange Rate
- 4. What Is the Optimum Current-Account Level?
- 4.1 Basic Hypotheses
- 4.2 Consumption Smoothing
- 4.3 Comparing with a Closed Economy
- 4.4 How Economic Shocks Affect the Current Account
- 4.5 Adding Government
- 4.6 The Model with Production and Investment
- 4.7 The Model and the World
- 4.8 Exercises
- 5. The Equilibrium Real Exchange Rate
- 5.1 The Real Exchange Rate and the Price of Nontradable Goods
- 5.2 Production, Consumption, and Equilibrium
- 5.3 How Does the Real Exchange Rate Respond to Shocks?
- Mathematical Appendix
- 5.4 Exercises
- Part III: Determination of the Nominal Exchange Rate
- Part III. Determination of the Nominal Exchange Rate
- Why Different Models?
- 6. Money and Exchange Rate in the Long Run
- 6.1 Money, Assets, and Goods Markets
- 6.2 Exchange Rate Fundamentals
- 6.3 Applications, Extensions, and Limits of the Model
- Mathematical Appendix
- 6.4 Exercises
- 7. Macroeconomic Policies and Exchange Rate in the Short Run
- 7.1 Rigid Prices: The Mundell–Fleming Model
- 7.2 Sticky Prices: The Mundell–Fleming–Dornbusch Model
- 7.3 Monetary Models with Price Rigidity: Their Uses and Limitations
- 7.4 Exercises
- 8. Portfolio Diversification and Capital Flows
- 8.1 Assets from Different Countries: Imperfect Substitutes
- 8.2 Gross Capital Flows and Current Account
- 8.3 Net International Investment Position
- 8.4 Impact of Shocks on Exchange Rate and Current Account
- Mathematical Appendix
- 8.5 Exercises
- Part III. Determination of the Nominal Exchange Rate
- Part IV: Crises and Exchange Rate Policy
- Part IV. Crises and Exchange Rate Policy
- 9. Currency Crises
- 9.1 The Speculative Attack as Asset Price Arbitrage
- 9.2 Crises as Self-Fulfilling Prophecies
- 9.3 The Role of Banks and Foreign Debt
- 9.4 Contagion
- 9.5 Exercises
- 10. Exchange Rate Regimes
- 10.1 Classification of Exchange Rate Regimes
- 10.2 What Exchange Rate Regime Should Be Chosen?
- Mathematical Appendix
- 10.3 Exercises
- 11. Political Economy of Exchange Rate Policy
- 11.1 Distributive Impacts of the Real Exchange Rate
- 11.2 Exchange Rate as an Indicator of Competence
- 11.3 The Economic Policy of Fiscal Policy
- Mathematical Appendix
- 11.4 Exercises
- Part V
- Annexes
- I List of Currencies
- II Data List
- III List of Mathematical Symbols
- References
- Index
- Annexes
Product details
- No. of pages: 362
- Language: English
- Copyright: © Academic Press 2015
- Published: June 1, 2015
- Imprint: Academic Press
- eBook ISBN: 9780128025383
- Paperback ISBN: 9780128022979
About the Author
Cristina Terra
Cristina Terra is professor of economics at ESSEC Business School. PhD in economics from Princeton University, she has taught in France, Brazil, and the United States. She has been Director of École Doctorale Économie Management et Mathématiques de Cergy at Université de Cergy-Pontoise, and Director of Graduate Studies at Fundação Getulio Vargas, Brazil. Her mains research interests are International Economics and Development Economics, with several articles published in international economic journals, such as Journal of International Economics, Journal of Development Economics, The Quarterly Journal of Economics, among others. She is member of the editorial board of Journal of Applied Economics and an associate researcher at THEMA and CEPII.
Affiliations and Expertise
ESSEC Business School and THEMA, France
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