First Published in 2007. Routledge is an imprint of Taylor & Francis, an informa company.

Ronald MacDonald is the Adam Smith Professor of Political Economy,
University of Glasgow

1. Introduction: Some Basic Concepts and Stylised facts and the Case For (and Against) Floating Exchange Rates 2. Purchasing Power Parity and the PPP Puzzle 3. The Economics of the PPP Puzzle 4. The Flexible Price Monetary Model 5. The Sticky Price Monetary Model 6. Empirical Evidence on the Monetary Exchange Rate Model 7. Currency Substitution and Portfolio Balance Models 8. Real Exchange Rate Determination: Theory and Evidence 9. Equilibrium Exchange Rates: Measurement and Misalignment 10. The New Open Economy Macroeconomics and Exchange Rate Behaviour 11. The New Open Economy Macroeconomics: Pricing to Market and Exchange Rate Volatility Redux 12. The Economics of Fixed Exchange Rates, Part 1: Target Zone Models 13. The Economics of Fixed Exchange Rates, Part 2: Speculative Attack Models and Contagion 14. The Market Microstructure Approach to the Foreign Exchange Market 15. Spot and Forward Exchange Rates and the Forward Premium Puzzle