International Money and Finance

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Summary: A comprehensive study of the international financial system
Review: This book is excellent for challenging undergraduate courses as well as graduate courses in international finance. It has a unique mixture of theory, evidence and institutions. The theory is mainly delivered to you using a few equations and helpful diagrams. The "evidence" part accompanies each theoretical offering and usually takes the form of reporting the structure and results of empirical tests. As far as I know this is the only international finance text that gives so much insight into the econometrics of international finance. It is well known that MacDonald is an international expert in the econometrics of international finance, and the bibliography indicates that he has worked quite a lot with Hallwood investigating various propositions concerning the behaviour of pegged exchange rate regimes. One of the best features of the book is the way that the theory and evidence is used in the discussion of international institutions such as the operation of fixed and floating exchange rates, currency unions and development of the international financial architecture. There is also an extensive discussion of the main features of the history of international monetary systems. Finally the authors have made an effort to bring in some discussion of international finance in east Asia. Probably the book could have benefitted from more discussion of regional issues such as these. Even so there is quite a good theoretical discussion of dollarization in Latin America.

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Summary: A leading text has just been updated.
Review: We have tried hard to keep abreast of the literature in all of the main fields of international finance - theory, evidence, institutions and policy. As we believe that scholarship requires the scholar to know the sources of ideas - every idea having its own author(s), we have not spared the student the bother of knowing about the researchers and the generation of ideas in international money and finance. We cover 'recieved wisdom' as well as the important new developments in the field. The latter include such diverse subjects as theoretical innovations in the general equilibrium theory of exchange rate determination, explanations for the relative immobility of long-term capital alongside highly mobile short-term capital, the behavior of exchange rates within target zones, theories of the best course of financial integration of transition economies and developing countries into the circuit of international capital, explanations for why real exchange rates often diverge for long periods from purchasing power parity, how misinformed speculation and speculative bubbles can cause floating exchange rates to be unstable, new successful empirical methods for forecasting exchange rates, and a reassessment of the performance of the gold standard in the 19th century and its role in the Great Depression. This textbook-monograph - written for smart undergraduate and gradute students, is widely used on three continents (the Chinese translation appeared in 1996). And we know that is it used for course work at Ivy League universities in the US, and many universities throughout Europe.