International Finance

For courses in International Finance

A balanced approach to theory and policy applications

International Finance: Theory and Policy provides engaging, balanced coverage of the key concepts and practical applications of the discipline. An intuitive introduction to international finance theory is followed by detailed coverage of policy applications. With this new 12th Edition, the author team of Nobel Prize-winning economist Paul Krugman, renowned researcher Maurice Obstfeld, and Marc Melitz of Harvard University continues to set the standard for International Finance courses.

Key features

• A unified model of open-economy macroeconomics that provides students with a cohesive approach to the theory, based on an asset-market approach to exchange rate determination with expectations in a central role.
• A discussion of the international monetary experience that stresses the idea that different exchange rate systems lead to different policy coordination problems.
• An emphasis on the potential substitutability of international trade and international movements of factors of production, featuring an analysis of international borrowing and lending as intertemporal trade - the exchange of present consumption for future consumption.
• Learning Goals list essential concepts so students understand what they need to take away from each chapter.
• Case Studies illustrate theory using real-world applications and provide important historical context.
• Special Boxes offer vivid illustrations of points made in the text, including the role of currency swap lines among central banks, and the rapid accumulation of foreign exchange reserves by developing countries. 200+ Captioned diagrams reinforce discussions in the text and help students in reviewing the material.
• Summary and Key Terms. Each chapter closes with a summary recapping the major points to aid student review of the material.
• Problems, many of which cite real data or policies, allow students to practice what they're learning. They range from routine computational drills to more analytical questions and problems. All end-of-chapter problems are included in MyLab Economics so that instructors can assign homework without needing to grade students' work by hand.
• Further Reading sections at the end of each chapter provide annotated bibliographies of both seminal works and recent articles, encouraging students to explore the material further.

New to this edition

• Additional coverage of relevant topics and events including the impact of the North American Free Trade Agreement (NAFTA) on car production in Canada, Mexico, and the United States; why the decision by Nabisco to move production of Oreo cookies to Mexico is a consequence of trade restrictions on refined sugar; the role of negative interest rates in unconventional monetary policy; and the increasingly important role of emerging market economies in driving global growth.
• Describes China's offshore market and the relationship between its onshore and offshore exchange rates.
• The role of invoice currencies in exchange-rate pass-through and discussion of the role of negative interest rates in unconventional monetary policy.
• Describes the dangers of deflation. Brexit, specifically the process through which Britain is likely to leave the EU.
• Coverage of the key role of commodities in developing-country growth, and the commodity super cycle.

About the Authors

Paul Krugman, recipient of the 2008 Nobel Memorial Prize in Economic Sciences, taught at Princeton University for 14 years. In 2015, he joined the faculty of the Graduate Center of the City University of New York, associated with the Luxembourg Income Study, which tracks and analyses income inequality around the world. He received his BA from Yale and his PhD from MIT. Before Princeton, he taught at Yale, Stanford, and MIT.

Maurice Obstfeld is the Class of 1958 Professor of Economics at UC Berkeley. He joined Berkeley in 1989 as a professor, following appointments at Columbia (1979-1986) and the University of Pennsylvania (1986-1989). He was also a visiting professor at Harvard between 1989 and 1991.

Marc Melitz is the David A. Wells Professor of Political Economy at Harvard University. He holds a BA from Haverford College (1989), an MSBA from the Robert Smith School of Business (1992), and a PhD from the University of Michigan (2000). He is a fellow of the Econometric Society and is affiliated with the National Bureau of Economic Research (NBER), the Centre for Economic Policy Research (CEPR), CESifo, and the Kiel Institute for the World Economy.