International Finance: Contemporary Issues.

• Author: Ghosh, Sukesh K.

This book is intended to be an intermediate level book on the current and recurring issues of international finance treated at a medium technical level. It covers six themes ranging from institutional aspects of international finance through monetary and economic union in Europe down to the issues of debt of the U.S. and emerging major currencies of the world. These six themes are dovetailed from the collected articles of a rather large number of contributors, most, if not all, of whom have some name in theoretical and empirical international finance.

Part I introduces the structural aspects of international finance and multilateral financial institutions. In this part are discussed such things as size and shape (along with their trends) of international capital markets, integration between various sectors, institutions, maturities and instruments as a result of liberalization and deregulation of endogenous financial markets; disappearance of short-term interest rate differentials for major industrialized nations (up to the end of the eighties); differences between developing and developed economies in terms of current account disequilibria and their correction-mechanism; the role of the IMF in smoothing out imbalances of various sorts of its member nations; and the financial demands of Eastern Europe and the former Soviet Union.

Part II is on European monetary union. It includes an account of the progress made on economic and monetary union in Europe, and indicates possible alternatives to the current rules and formulae for more effective monetary integration in future. These are also the aspects that are emphasized in the Delors Committee report, Economic and Monetary Union in the European Community (Committee for the Study of Economic and Monetary Union, Brussels, June 1990).

Part III deals with world equity markets. In this section, the focus is on international asset pricing including causes of across-the-border stock investment and its effect on economic growth. In particular, this part sheds light on the fastest growing economic region of the world, the Asia-Pacific region, which, along with Japan, has slowly opened its capital markets with obvious implications for long-term investment growth in this region.

Part IV is on capital mobility and foreign exchange markets. On the belief that capital mobility is nearly perfect, the straightforward conclusion is that interest rates would equalize across countries if it were not for high...