Includes bibliographical references and index.

Evolution of the International Financial System -- The scale of international financial flows -- A short history of global finance -- Financial globalisation: benefits and risks -- Plan of this book -- Accounting and Measurement Issues -- Open economy accounting relations -- Absorption, income and the current account -- Saving, investment and the external accounts -- Valuation effects -- International financial flows and national wealth -- Asset markets and the external accounts -- Inflation-adjusted current account -- National wealth accounting -- Capital gains and national income -- Exchange rates -- Early Balance of Payments Models -- The classical approach -- The basic model -- Limitations -- The elasticities approach -- The dependent economy approach -- Monetary approaches -- Limitations and extensions -- Intertemporal Trade, Capital Mobility and Interest Rates -- The intertemporal approach -- Graphical analysis -- Offer curve analysis -- Capital market integration, foreign debt and wealth -- Loanable funds approach -- Further defining capital mobility -- Empirical evidence -- Financial Flows, Interest Rates and Exchange Rates -- Reconsidering interest rate parity -- The Fisher effect and UIP -- Foreign borrowing, lending and risk -- More on exchange rate expectations -- Exchange rate behaviour in an intertemporal framework -- The analytical framework -- Intertemporal relations -- Expenditure shocks -- Asymmetric expectations -- Output shocks -- Macroeconomic Policy in the Open Economy -- The Mundell-Fleming model -- Expenditure and monetary shocks -- Increased autonomous expenditure -- Monetary expansion -- Stability analysis -- Graphical analysis -- Goods market specification -- External accounts specification -- Ricardian equivalence -- Money, Expenditure and External Adjustment -- An open economy AD/AS Framework -- Underlying relationships -- Aggregate demand and supply functions -- International investment flows -- Monetary shocks -- Monetary expansion under fixed exchange rate -- Monetary expansion under floating exchange rate -- Foreign interest rate shock -- Fiscal shocks -- Public spending under fixed exchange rate -- Public spending rise under floating exchange rate -- Foreign Capital and Economic Growth -- Saving, investment and capital flows -- Foreign capital as a source of growth -- Graphical analysis -- The basic model -- Comparative statics -- The adjustment process -- Capital transfer -- Tax effects -- Interest rates and financial claims -- Long-term dynamics -- Financial Globalisation and Emerging Market Crises -- Financial crises in emerging markets -- Moral hazard and the IMF -- Financial sector problems -- International portfolio adjustment and asset prices -- Rest-of-the-world effects -- Policy responses: an analogy -- The future of financial globalisation.

This book provides new ways of analyzing the key issues in international finance and open economy macroeconomics. The topics covered include: financial globalization and the evolution of the international financial system; international macroeconomic accounting and measurement; early balance of payments approached; the inter-temporal model of international borrowing and leading; the significance of external deficits; the determinants of interest rate differentials and exchange rates; the effectiveness of monetary and fiscal policies; and capital mobility and economic growth.