This textbook focuses on key international monetary and financial phenomena, exploring the determinants of exchange rates, international competitiveness, interest rates, saving, investment, international capital flows, commodity prices, the terms of trade, financial crises, foreign investment and economic growth. The text enhances understanding of international money and finance by providing background on globalisation and characteristics of the world economy, as well as detailed explanation of important international monetary variables. It then systematically develops a suite of compatible theoretical frameworks to analyse perennially important international monetary questions.
A major feature of the text is its emphasis on real world policy relevance, covering topics such as inflation targeting, the operation and effectiveness of fiscal and monetary policy, public debt sustainability, exchange rate regime choice, commodity price gyrations, the causes and consequences of financial crises, and the gains from foreign investment.
‘For too long, standard macroeconomics texts have largely reflected the Keynesian legacy of a closed economy approach. But the world has changed and the international flows of goods, services, people and capital are a dominant feature of the modern global economy. It is no longer adequate for a macroeconomics text to touch on these issues in a few closing chapters. This volume contributes to a different view: one which places international issues front and centre. The scope and limitations of monetary and fiscal policy are analysed in a global context in which international financial markets and exchange rates play a critical role. These are not easy topics for a student. This volume stands out for the extraordinary clarity with which it addresses complex issues.’ — Grant M. Scobie, New Zealand Productivity Commission
1. The World Economy
2. International Monetary Measures
3. The Exchange Rate and Competitiveness
4. Consumption, Saving and Investment
5. Saving, investment and Capital flows
6. Interest Parity
7. The Government Budget and Fiscal Policy
8. The Central Bank and Monetary Policy
9. Macroeconomic Policy in the Short Run
10. Foreign exchange market intervention
11. Tradables and Nontradables
12. Commodity Prices and the Terms of Trade
13. Financial Crises and Foreign investment
14. Economic Growth
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