Exchange Rates And International Finance 6th Edn by Laurence CopelandExchange Rates And International Finance 6th Edn by Laurence Copeland

Exchange Rates And International Finance 6th Edn

byLaurence Copeland

Paperback | April 17, 2014

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Acclaimed for its clarity, Exchange Rates and International Finance provides an approachable guide to the causes and consequences of exchange rate fluctuations, enabling you to grasp the essentials of the theory and its relevance to these major events in currency markets.

 

The orientation of the book remains towards exchange rate determination, with particular emphasis given to the contributions of modern finance theory.

 

This sixth edition of this established text addresses the impact of the global financial crisis.

Title:Exchange Rates And International Finance 6th EdnFormat:PaperbackDimensions:592 pages, 9.75 × 7.5 × 1.1 inPublished:April 17, 2014Publisher:Pearson EducationLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0273786040

ISBN - 13:9780273786047

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Table of Contents

Preface and acknowledgements   

1 Introduction   

   Introduction

   1.1 What is an exchange rate?

   1.2 The market for foreign currency

   1.3 The balance of payments

   1.4 The DIY model

   1.5 Exchange rates since World War II: a brief history

   1.6 Overview of the book

   Summary

   Reading guide  

   Notes   

Part 1

THE INTERNATIONAL SETTING

2 Prices in the open economy: purchasing power parity

   Introduction   

   2.1 The law of one price in the domestic economy

   2.2 The law of one price in the open economy

   2.3 A digression on price indices

   2.4 Purchasing power parity

   2.5 Purchasing power parity – the facts at a glance

   2.6 Purchasing power parity extensions

   2.7 Empirical research

   2.8 Conclusions

   Summary

   Reading guide

   Notes   

  

3 Financial markets in the open economy

   Introduction   

   3.1 Uncovered interest rate parity

   3.2 Covered interest rate parity

   3.3 Borrowing and lending

   3.4 Covered interest rate parity – the facts

   3.5 Efficient markets – a first encounter

   3.6 The carry trade paradox

   3.7 Purchasing power parity revisited

   Summary

   Reading guide

   Notes   

4 Open economy macroeconomics

   Introduction   

   4.1 IS–LM model of aggregate demand

   4.2 Aggregate supply

   4.3 Conclusions

   Summary

   Reading guide  

   Notes   

Part 2

EXCHANGE RATE DETERMINATION

5 Flexible prices: the monetary model

   Introduction   

   5.1 The simple monetary model of a floating exchange rate

   5.2 The simple monetary model of a fixed exchange rate

   5.3 Interest rates in the monetary model

   5.4    The monetary model as an explanation of the facts

   5.5 Conclusions

   Summary

   Reading guide  

   Notes   

  

6 Fixed prices: the Mundell–Fleming model

   Introduction   

   6.1 Setting  

   6.2 Equilibrium

   6.3 Monetary expansion with a floating exchange rate

   6.4 Fiscal expansion with a floating exchange rate

   6.5 Monetary expansion with a fixed exchange rate

   6.6 Fiscal expansion with a fixed exchange rate

   6.7 The monetary model and the Mundell–Fleming model compared

   6.8 Evidence

   6.9 Conclusions

   Summary

   Reading guide  

   Notes   

7 Sticky prices: the Dornbusch model

   Introduction   

   7.1 Outline of the model

   7.2    Monetary expansion

   7.3 A formal explanation

   7.4 Case study: oil and the UK economy

   7.5 Empirical tests: the Frankel model

   7.6 Conclusions

   Summary

   Reading guide  

   Notes   

8 Portfolio balance and the current account

   Introduction   

   8.1 Specification of asset markets

   8.2 Short-run equilibrium

   8.3 Long-run and current account equilibrium

   8.4 Evidence on portfolio balance models

   8.5 Conclusions

   Summary

   Reading guide  

   Notes   

9 Currency substitution

   Introduction   

   9.1 The model

   9.2 Evidence on currency substitution

   9.3 Conclusions

   Summary

   Reading guide  

   Notes   

10   General equilibrium models

   Introduction   

   10.1   The Redux model

   10.2   Extensions of Redux

   10.3   Evidence

   10.4   Conclusions

   Summary

   Reading guide  

   Notes   

   Appendix 10.1: Derivation of price index (Equation 10.2)

   Appendix 10.2: Derivation of household demand (Equations 10.6 and 10.6′)

   Appendix 10.3: Log linearisation of model solution (Equations L1–L4)

   Appendix 10.4: Sticky prices

Part 3

A WORLD OF UNCERTAINTY

11   Market efficiency and rational expectations

   Introduction   

   11.1   Mathematical expected value

   11.2   Rational expectations

   11.3   Market efficiency

   11.4 Unbiasedness

   11.5   The random walk model

   11.6   Testing for efficiency: some basic problems

   11.7   Spot and forward rates: background facts

   11.8   Results

   11.9   Conclusions   

   Summary

   Reading guide  

   Notes   

12   The ‘news’ model, exchange rate volatility and forecasting

   Introduction  

   12.1   The ‘news’ model: a simple example

   12.2 The monetary model revisited

   12.3   Testing the ‘news’

   12.4   Results

   12.5   Volatility tests, bubbles and the peso problem

   12.6   Conclusions

   Summary

   Reading guide  

   Notes   

13   The risk premium

   Introduction  

   13.1   Assumptions

   13.2   A simple model of the risk premium: mean–variance analysis

   13.3   A general model of the risk premium

   13.4   The evidence on the risk premium

   13.5   Conclusions

   Summary

   Reading guide  

   Notes   

Part 4

FIXED EXCHANGE RATES

14   Target zones

   Introduction  

   14.1   What is a target zone

   14.2   Effect of target zones

   14.3   Smooth pasting

   14.4   An option interpretation

   14.5   A honey moon for policymakers?

   14.6   Beauty and the beast: the target zone model meets the facts

   14.7   Intramarginal interventions: leaning against the wind

   14.8   Credibility and realignment prospects

   14.9   Conclusions

   Summary

   Reading guide  

   Notes   

   Appendix 14.1: Formal derivation model

15   Crises and credibility

   Introduction  

   15.1   First-generation model

   15.2   Second-generation crisis models

   15.3   Third-generation models

   15.4   The 2008 crisis

   15.5   Conclusions

   Summary

   Reading guide  

   Notes   

16   Optimum currency areas, monetary union and the eurozone

   Introduction  

   16.1   Benefits of monetary union

   16.2   Costs of monetary union

   16.3   Other considerations

   16.4   Currency bonds

   16.5   The eurozone

   16.6   Conclusions

   Summary

   Reading guide  

   Notes   

Part 5

ALTERNATIVE PARADIGMS

17   Heterogeneous expectations and scapegoat models

   Introduction  

   17.1   The market maker model

   17.2   Introduction to expectations with heterogeneous information

   17.3   Conclusions

   Summary

   Reading guide  

   Notes   

  

   Appendix 17.1 :

   A.   Derivation of the first-order condition for money (Equation 17.36)

   B.    Derivation of the first-order condition for foreign bonds (Equation 17.37)

   C.   Proof of the solution for the exchange rate (Equation 17.43)

   D.   Proof that Equation 17.50 is the solution for Equation 17.49

18   Order flow analysis

   Introduction  

   18.1   The structure of the foreign currency market

   18.2   Defining order flow

   18.3   Fear of arbitrage, common knowledge and the hot potato

   18.4   The pricing process

   18.5   Empirical studies of order flow

   18.6   Conclusions

   Summary

   Reading guide  

   Notes   

   19   A certain uncertainty: nonlinearity, cycles and chaos

   Introduction  

   19.1   Deterministic versus stochastic models

   19.2   A simple nonlinear model

   19.3   Time path of the exchange rate

   19.4   Chaos  

   19.5   Evidence

   19.6   Conclusions

   Summary

   Reading guide  

   Notes   

Part 6

CONCLUSIONS

20   Conclusions

   Introduction  

   20.1   Summary of the book

   20.2   The research agenda

   Notes   

Appendix: list of symbols

Bibliography  

   Index