Principles of International Finance and Open Economy Macroeconomics

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.

• 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

Upper-division undergraduate and graduate level students working in international macroeconomics.

• 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 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