International Money and Finance

, by Hallwood, C. Paul; MacDonald, Ronald

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ISBN: 9780631204626 | 0631204628
Cover: Paperback
Copyright: 9/1/2000

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With the third edition of International Money and Finance, Hallwood and MacDonald continue to provide an invaluable resource for advanced undergraduates and graduates studying monetary economics in an international context. Reflecting monetary, neoclassical, and neoKeynesian research agendas, the book investigates all four dimensions of international money and finance - theory, evidence, policy, and institutions.In addition to offering new and revised sections to reflect the latest theoretical and empirical research, the third edition includes new chapters on:- real shocks and exchange regime volatility.- currency crises and speculative attack.- exchange rate target zones and 'dirty floating'- exchange rates and transition economies.

List of Figures

List of Tables

xiv

Preface

xvi

Introduction

(9)

The chapters

(8)

Some Basic Concepts in International Finance

(14)

The exchange rate

(4)

The balance of payments accounts

(4)

Purchasing power parity

(1)

Floating exchange rates: prospect and retrospect

(3)

Exchange rate volatility

(2)

Spot and Forward Exchange Rates: Some More Basic Ideas

(20)

The elasticities view of the exchange rate

(8)

The forward exchange rate, arbitrage, and pure speculation

(6)

Covered interest rate parity--empirical evidence

(2)

Uncovered interest rate parity--empirical evidence

(1)

Real interest rate parity--empirical evidence

(3)

Income and the Balance of Payments

(23)

The foreign trade multiplier

(1)

The equilibrium real exchange rate

(3)

An early view of economic management

(1)

The assignment problem

(2)

The absorption approach

(4)

Intertemporal utility maximization and the current account

(2)

Twin deficits

(1)

Foreign repercussions with no capital mobility

(8)

Macroeconomics in an Open Economy: The Mundell--Fleming Model and Some Extensions

(27)

The ``base-line'' Mundell-Fleming model

(7)

The large country case

(1)

Insulation and the Mundell-Fleming model

(1)

Imperfect capital mobility and the Mundell-Fleming model

(3)

Regressive expectations and monetary-fiscal policy

(3)

The J curve effect and regressive expectations

(1)

Wealth effects

(1)

Aggregate supply, the real balance effect, and the exchange rate in the Mundell-Fleming model

(6)

Summary and conclusions

(3)

International Policy Coordination

(28)

The two-country Mundell-Fleming model and macroeconomic interdependence

(11)

The potential gains from policy coordination

106

(7)

Dynamic games, and the sustainability and reputation credibility of international cooperation

113

(2)

Some evidence on the potential benefits of coordination

115

(2)

Potential impediments to policy coordination and the appropriate form of such coordination

117

(5)

Purchasing Power Parity: Theory and Evidence

122

(33)

The absolute and relative purchasing power parity concepts

123

(2)

The efficient markets view of purchasing power parity

125

(2)

Further interpretation of purchasing power parity

127

(7)

The empirical validity of purchasing power parity

134

(19)

Concluding comments

153

(2)

The Monetary Approach to the Balance of Payments

155

(21)

What is so different about the monetary approach?

156

(3)

The global monetarist model

159

(9)

Sterilization and the reserve offset coefficient

168

(5)

The international transmission of inflation: some evidence

173

(3)

The Monetary View of Exchange Rate Determination

176

(36)

The asset approach to the exchange rate

177

(2)

The flex-price monetary approach to the exchange rate

179

(3)

Introducing expectations

182

(4)

Rational speculative bubbles

186

(2)

The sticky-price monetary approach

188

(5)

Currency substitution

193

(5)

Empirical evidence on the monetary model

198

(5)

Recent empirical evidence on the monetary model

203

(3)

Empirical tests for the existence of speculative bubbles

206

(2)

Concluding comments

208

(4)

The Monetary Model: Further Applications--Real Shocks and Exchange Regime Volatility

212

(14)

The general equilibrium monetary model

213

(2)

The monetary model and regime volatility

215

(2)

Empirical evidence on the general equilibrium approach

217

(7)

Concluding comments

224

(2)

The Portfolio Balance Approach to the Determination of the Exchange Rate

226

(23)

The portfolio balance model

230

(5)

Open market purchase of bonds: monetary policy

235

(3)

An increase in the supply of domestic bonds: fiscal policy

238

(3)

Asset preference shift

241

(1)

Econometric evidence on the portfolio balance approach

242

(4)

Summary and concluding comments

246

(3)

Spot and Forward Exchange Rates and the Efficient Markets Hypothesis

249

(28)

Spot and forward exchange rates

250

(5)

The efficient markets hypothesis and the forward market for foreign exchange

255

(4)

Econometric estimation of the efficient markets hypothesis

259

(4)

A risk premium story to explain why &betta; may not be unity

263

(5)

Empirically implementing equation (12.20)

268

(6)

Concluding comments

274

(3)

Expectational Explanations for the Rejection of the Efficient Markets Hypothesis and the ``News''

277

(26)

Peso effects, rational speculative bubbles, and econometric inference

278

(2)

Technical analysis and chartism

280

(8)

Survey data, expectations, and risk

288

(3)

Market microstructure

291

(3)

The news approach to exchange rate modeling

294

(1)

Empirical studies of the news approach

295

(5)

The noise-trader paradigm

300

(3)

Currency Crises and Speculative Attacks

303

(18)

Recent international financial crises

303

(2)

First-generation speculative attack models

305

(5)

Second-generation models

310

(1)

Econometric estimates of speculative attack models

311

(1)

Microeconomic indicators

312

(2)

Contagion

314

(1)

Interest rate, foreign exchange, and credit risk

315

(2)

Possible policy responses

317

(4)

Exchange Rate Target Zones and ``Dirty Floating''

321

(15)

Target zones

321

(6)

Target zone credibility

327

(3)

Calculating the devaluation probability--Mizrach's method

330

(2)

Dirty floating

332

(4)

The International Gold Standard: Theory and Experience

336

(17)

Credibility and exchange rate regimes

336

(9)

The gold standard during the interwar period

345

(8)

The Dollar Standard Today and During the Bretton Woods Era

353

(18)

The Bretton Woods system to 1971

354

(4)

The dollar standard

358

(5)

Reserve creation and the US and world price levels

363

(4)

The East Asian dollar standard

367

(4)

Monetary Unions

371

(17)

Benefits and costs of a monetary area: seminal ideas

371

(3)

Melitz and the covariance of equilibrium real exchange rates approach

374

(5)

Bayoumi's general equilibrium model of the optimum currency area

379

(1)

Ad hoc benefits of a pegged exchange rate or common currency

380

(3)

Estimating shocks

383

(2)

Fiscal federalism

385

(1)

More on fiscal policy in a monetary union

386

(2)

International Capital Flows

388

(21)

International money and capital flows

388

(2)

Eurobanking

390

(6)

Regulation: the Basle capital accord

396

(2)

Measuring international capital mobility

398

(6)

International bond markets

404

(5)

Developing Countries, Balance of Payments Adjustment, and the International Monetary Fund

409

(21)

Developing country exchange rate arrangements: to peg or not to peg?

410

(3)

Liberalization, the equilibrium real exchange rate, and economic policy

413

(2)

The IMF: its role

415

(4)

The IMF's monetary approach to the balance of payments

419

(2)

The new structuralist debate

421

(9)

The Order of Liberalization in Developing Countries

430

(13)

Distortions and economic performance

431

(4)

Unhappy experience with financial liberalization

435

(2)

The order of liberalization

437

(6)

Exchange Rates and Transition Economies

443

(13)

Economic reforms

443

(1)

Microeconomic-macroeconomic equilbrium

444

(3)

Shocks to the equilibrium real exchange rate

447

(2)

The real exchange rate in asset market equilibrium

449

(4)

On knowing the correct real exchange rate

453

(1)

Choice of an exchange rate regime by a TE

454

(2)

International Debt

456

(16)

The debt problem

456

(3)

Growth of international debt

459

(2)

Debt and economic growth

461

(2)

Capital flight

463

(1)

Governmental and national foreign indebtedness

464

(1)

The lenders' trap

465

(1)

Some debt reform proposals

466

(3)

An international debt facility

469

(3)

International Monetary Reform

472

(18)

Financing or adjustment?

473

(3)

Designing an international monetary system

476

(3)

Yen and DM currency blocs

479

(2)

The costs and benefits of flexible exchange rates

481

(4)

Alternative plans for the reform of the international monetary system

485

(5)

Bibliography

490

(40)

Author Index

530

(8)

Subject Index

538

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International Money and Finance

Summary

Author Biography

Table of Contents

Supplemental Materials