For this two-volume set the editor has selected the key contributions to the field of open economy macroeconomics which have been made over the past half century and more. The articles selected cover traditional open economy models, first generation intertemporal open economy models, the...

The book details 15 puzzling facts associated with open economies and the FX market. After reviewing existing explanations to these puzzles, the author shows how each of the above new theories provides new, often unified solutions to them.

In a flexible exchange rate open economy, the dynamics of the interest rate within a loanable funds, LF, or an "amended" liquidity preference, LP, model (wherein the latter embodies either "cash-in-advance" or "spillover" considerations) can differ substantially from the dynamics within a...

The paper develops a flow model of the exchange rate with speculative capital flows integrated in a rigorous manner. The model is consistent with five foreign exchange market puzzles: (1) occasional discontinuous jumps in the exchange rate; (2) periodic short-term regimes of persistent...