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The exchange rate is the most important price in any economy, since it affects all other prices. Exchange rates are set, either directly or indirectly, by government policy. Exchange rates are also central to the global economy, for they profoundly influence all international economic activity. Despite the critical role of exchange rate policy, there are few definitive explanations of why governments choose the currency policies they do. Filled with in-depth cases and examples, this book presents a comprehensive analysis of the politics surrounding exchange rates. Identifying the motivations for currency policy preferences on the part of industries seeking to influence politicians, the book shows how each industry's characteristics—including its exposure to currency risk and the price effects of exchange rate movements—determine those preferences. The book evaluates the accuracy of this theoretical argument in a variety of historical and geographical settings: it looks at the politics of the gold standard, particularly in the United States, and examines the political economy of European monetary integration. It also analyzes the politics of Latin American currency policy over the past forty years, and focuses on the daunting currency crises that have frequently debilitated Latin American nations, including Mexico, Argentina, and Brazil. With a mix of narrative and statistical investigation, the book clarifies the political and economic determinants of exchange rate policies.

This is the first book to provide a fully comprehensive overview of the complicated issues facing multinational companies and their global sourcing strategies. Few international trade transactions today are based on the exchange of finished goods; rather, the majority of transactions are dominated by sales of individual components and intermediary services. Many firms organize global production around offshoring parts, components, and services to producers in distant countries, and contracts are drawn up specific to the parties and distinct legal systems involved. This book examines the contractual frictions that arise in the international system of production and how these frictions influence the world economy. The book discusses the inevitable complications that develop in contract negotiation and execution. It provides a unified framework that sheds light on the factors helping global firms determine production locations and other organizational choices. The book also implements a series of systematic empirical tests, based on recent data from the U.S. Customs and Census Offices, which demonstrate the relevance of contractual factors in global production decisions. Using an integrated approach, the book is an excellent resource for researchers, graduate students, and advanced undergraduates interested in the inner workings of international economics and trade.

Over the past few decades, matching models, which use mathematical frameworks to analyze allocation mechanisms for heterogeneous products and individuals, have attracted renewed attention in both theoretical and applied economics. These models have been used in many contexts, from labor markets to organ donations, but recent work has tended to focus on “nontransferable” cases rather than matching models with transfers. This book fills a gap in the literature by presenting a clear and elegant overview of matching with transfers and provides a set of tools that enable the analysis of matching patterns in equilibrium, as well as a series of extensions. It then applies these tools to the field of family economics and shows how analysis of matching patterns and of the incentives thus generated can contribute to our understanding of long-term economic trends, including inequality and the demand for higher education.

Money is nothing more than what is commonly exchanged for goods or services, so why has understanding it become so complicated? This book cuts through the confusions surrounding the subject to present a compelling and accessible account of a topic that affects us all. It tells the fascinating story of money, the key factors that shaped its development, the forces contending for control of money, and the lessons that can be learned from its history. The book describes the creation and evolution of monetary systems and explains how finance, credit, and banks work in the global economy. It also shows that, when it comes to money, nothing is truly new—least of all inflation and fraud. The book discusses the history of coins made of precious metals, the the history of paper money, the history of banks, and more.

This book originated from a 2010 conference marking the fortieth anniversary of the publication of the landmark “Phelps microfoundations volume,” Microeconomic Foundations of Employment and Inflation Theory, a book that is often credited with pioneering the currently dominant approach to macroeconomic analysis. However, this book argues that the vast majority of macroeconomic and finance models developed over the last four decades derailed, rather than built on, the Phelps volume's “microfoundations” approach. Whereas the contributors to the 1970 volume recognized the fundamental importance of according market participants' expectations an autonomous role, contemporary models rely on the Rational Expectations Hypothesis (REH), which rules out such a role by design. The financial crisis that began in 2007, preceded by a spectacular boom and bust in asset prices that REH models implied could never happen, has spurred a quest for fresh approaches to macroeconomic analysis. While the alternatives to REH presented in the book differ from the approach taken in the original Phelps volume, they are notable for returning to its major theme: understanding aggregate outcomes requires according expectations an autonomous role. The introductory chapter interprets the various efforts to reconstruct the field—some of which promise to chart its direction for decades to come.

The efficiency, safety, and soundness of financial markets depend on the operation of core infrastructure—exchanges, central counter-parties, and central securities depositories. How these institutions are governed critically affects their performance. Yet, despite their importance, there is little certainty, still less a global consensus, about their governance. This book examines how markets are, and should be, run. Utilizing a wide variety of arguments and examples from throughout the world, the book identifies and evaluates the similarities and differences between exchanges, central counter-parties, and central securities depositories. Drawing on knowledge and experience from various disciplines, including business, economics, finance, law, politics, and regulation, the book employs a range of methodologies to tackle different goals. Conceptual analysis is used to examine theoretical issues, survey evidence to describe key aspects of how market infrastructure institutions are governed and regulated globally, and case studies to detail the particular situations and decisions at specific institutions. The combination of these approaches provides a unique and rich foundation for evaluating the complex issues raised. The book analyzes efficient forms of governance, how regulatory powers should be allocated, and whether regulatory intervention in governance is desirable. It presents guidelines for identifying the optimal governance model for any market infrastructure institution within the context of its specific environment. The book provides a definitive and peerless reference for how to govern and regulate financial markets.