Stefan C. Norrbin
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Melvin, Michael, 1948
International money and finance / by Michael Melvin and Stefan Norrbin. -- 8th ed.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-12-385247-2 (alk. paper)
1. International finance. I. Norrbin, Stefan C. II. Title.
HG3881.M443 2013
332.042dc23
2012025772
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
For information on all Academic Press publications visit our website at http://store.elsevier.com
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Preface
International finance is one of the growth areas of the finance and economics curricula. Todays financial marketplace is truly global. No student of economics or finance can fully understand current developments without some background in international finance. If, after studying this text, a student can pick up The Wall Street Journal and understand the international financial news, along with its implications, then we feel that we have succeeded as teachers. To this end, International Money and Finance offers a concise yet comprehensive overview of the subject. The basics of the foreign exchange market and the balance of payments are presented, along with accessible discussions of the most recent research findings related to exchange rate determination. Topics covered range from the nitty-gritty of financing international trade to intuitive discussions of overshooting exchange rates and currency substitution.
The first edition of International Money and Finance grew from the lecture notes used to teach undergraduate students at Arizona State University. The notes, as well as the book, summarized the current literature in international finance, with only elementary math as a prerequisite. It was extremely gratifying to find that instructors at other institutions found the earlier editions to be useful texts for undergraduate and MBA students. In fact, the adoption list ranged from the leading MBA schools in the country to small rural four-year colleges. The fact that the text has proved successful with students of varying abilities and backgrounds is a feature that we have strived to retain in preparing this eighth edition.
Users of the past editions will find the eighth edition updated and substantially revised to keep pace with the rapidly changing world of international finance. There are several major changes in this edition. Most obvious is the reordering of topics and chapters to improve the flow between topics, and the addition of some frequently asked questions. The first section of the book discusses the basic concepts and definitions in international finance. The balance of payments definitions have moved to discussing extensions to the monetary approach.
The eighth edition has been written in the same spirit as the first sevento provide a concise survey of international finance suitable for undergraduate and MBA classes.
Acknowledgments
We are grateful to all who have offered comments leading to the revision of International Money and Finance. They include countless former students and instructors at other institutions, who provided informal comments on style and content. Earlier editions were reviewed by Mamadou K. Diallo of East Stroudsburg University, B.D. Elzas of Erasmus University, Judy L. Klein of Mary Baldwin College, Vibhas Madan of Drexel University, Kiminori Matsuyama of Northwestern University, Thomas Russell of Santa Clara University, Larry J. Sechrest of Sul Ross State University, Robert Sedgwich of Sheffield Hallam University, Darrel Young of St. Edwards University, Carl Beidleman of Lehigh University, Glenn W. Boyle of Louisiana State University, David Ding of Memphis State University, Chen Jia-sheng of the University of Denver, Francis A. Lees of St. Johns University, Chu-Ping Vijverberg of the University of Texas at Dallas, Robert Flood of Northwestern University, Samuel Katz of Georgetown University, Donald P. Stegall of California State University at Fresno, Clas Wihlborg of the University of Southern California, Bernard Gauci of Hollins University, Bang Nam Jeon of Drexel University, Chris Neely of the Federal Reserve Bank of St. Louis, Helen Popper of Santa Clara University, and Felix Rioja of Georgia State University, Lance Girton of the University of Utah, Bijou Yang Lester of Drexel University, Peter Pedroni of Williams College, Miguel Ramirez of Trinity College, Julie Ryan of Immaculata College, Niloufer Sohrabji of Simmons College, and Mark Wohar of the University of Nebraska. While we could not incorporate all of their thoughtful suggestions, we appreciate their comments and have no doubt that the text has been much improved by their reviews.
Finally, we welcome comments and criticism from users of the eight editions of International Money and Finance. Our hope is that the book will evolve over time to best suit your needs.
Michael Melvin
and
Stefan Norrbin
To the Student
Why Study International Finance?
Why study the subject of international money and finance? One reason is that career goals are paramount to many people, and in this regard the topic of the text is related to a growth area in the labor market. This book provides a background in international finance for those who expect to obtain jobs created by international investment, international banking, and multinational business activity. Other readers may have a more scholarly concern with rounding out their economic education by studying the international relationships between financial markets and institutions. Although a course in principles of economics is the only prerequisite assumed for this text, many students may have already taken intermediate macroeconomics, money and banking, or essentials of finance courses. But for those interested in international economic relationships, such courses often lack a global orientation. The economic models and discussions of the typical money and banking course focus on the