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Exchange Rate Economics
1430
Book reviews / Journal of Banking & Finance 20 (1996) 1427-1443
intervention; d) what the prospects are for a yen currency block among Pacific Basin countries; e) the desirability of a yen currency block from an investor's point of view.
P. Isard, Exchange Rate Economics (Cambridge University Press, 1995) pp. 275 The book provides a wide survey of exchange rate economics, to serve as a valuable reference to economists and to enlighten undergraduate and graduate students, and policymakers. Large and unpredictable swings in exchange rates present a major concern for macroeconomic stabilization policy. Since certain institutional characteristics and their historical evolution provide relevant perspectives in developing and understanding exchange rate behaviour. Part I, organized into two chapters, provides an historical and institutional background. The first chapter focuses on relevant characteristics of foreign exchange markets and money, while the second describes the different types of exchange rate arrangements that countries may choose, and presents the evolution of international monetary regimes. Part II focuses on the theoretical and empirical models describing the behavior of exchange rates, and it addresses the relationship between exchange rates and other economic variables. Despite the influence of market makers' instincts in accomplishing a transaction in response to trading flows and the flow of news and rumors, and despite the influence of exchange rate arrangements and of the actions of policy authorities, the behavior of exchange rates is fundamentally linked to the behavior of other economic variables: price levels, interest rates and international payment balances. Other chapters in Part ll are devoted to forward-looking models developed to capture the influence of news and of revisions in expectations, and the dynamic behavior of exchange rates; the empirical predictions of structural models of exchange rate behavior; new directions in the analysis of exchange rate behavior, such as the possible use of a policy optimization approach to model the behavior of realignment expectations in fixed exchange rates regimes, and new conceptual models of flexible exchange rates. Part II turns to exchange rate policy, to examine the choice of exchange rate arrangements and the key issues that policy makers confront in deciding whether and how to stabilize exchange rates. Perspectives are provided on the importance of fiscal and monetary discipline as a precondition for exchange rate stability.
H,S. Scott and P.A. Wellons, International Finance: Transactions, Policy and Regulation (The Foundation Press, Westbury, New York, 1995) pp. 1004 With the aid of key excerpts from readings offering different perspective on the subject, that of the scholar, the practitioner and the regulator, this book presents a new approach to the problems of international finance rooted in government policy
Book reviews / Journal of Banking & Finance 20 (1996) 1427-1443
intervention; d) what the prospects are for a yen currency block among Pacific Basin countries; e) the desirability of a yen currency block from an investor's point of view.
P. Isard, Exchange Rate Economics (Cambridge University Press, 1995) pp. 275 The book provides a wide survey of exchange rate economics, to serve as a valuable reference to economists and to enlighten undergraduate and graduate students, and policymakers. Large and unpredictable swings in exchange rates present a major concern for macroeconomic stabilization policy. Since certain institutional characteristics and their historical evolution provide relevant perspectives in developing and understanding exchange rate behaviour. Part I, organized into two chapters, provides an historical and institutional background. The first chapter focuses on relevant characteristics of foreign exchange markets and money, while the second describes the different types of exchange rate arrangements that countries may choose, and presents the evolution of international monetary regimes. Part II focuses on the theoretical and empirical models describing the behavior of exchange rates, and it addresses the relationship between exchange rates and other economic variables. Despite the influence of market makers' instincts in accomplishing a transaction in response to trading flows and the flow of news and rumors, and despite the influence of exchange rate arrangements and of the actions of policy authorities, the behavior of exchange rates is fundamentally linked to the behavior of other economic variables: price levels, interest rates and international payment balances. Other chapters in Part ll are devoted to forward-looking models developed to capture the influence of news and of revisions in expectations, and the dynamic behavior of exchange rates; the empirical predictions of structural models of exchange rate behavior; new directions in the analysis of exchange rate behavior, such as the possible use of a policy optimization approach to model the behavior of realignment expectations in fixed exchange rates regimes, and new conceptual models of flexible exchange rates. Part II turns to exchange rate policy, to examine the choice of exchange rate arrangements and the key issues that policy makers confront in deciding whether and how to stabilize exchange rates. Perspectives are provided on the importance of fiscal and monetary discipline as a precondition for exchange rate stability.
H,S. Scott and P.A. Wellons, International Finance: Transactions, Policy and Regulation (The Foundation Press, Westbury, New York, 1995) pp. 1004 With the aid of key excerpts from readings offering different perspective on the subject, that of the scholar, the practitioner and the regulator, this book presents a new approach to the problems of international finance rooted in government policy