Chapter 45: International Finance

Steven L. Husted

International finance International finance is the branch of international economics that deals with a variety of issues that are related to macroeconomic behavior, such as the determination of real income and the allocation of consumption over time, in a country that engages in international trade. As such, this field of study is also often referred to as international macroeconomics. Specific topics included in international finance include the balance of payments, exchange rate determination, and macroeconomic policy in an open economy. At the heart of this field is the fact that international economic activity between and among nations seldom, if ever, is perfectly balanced. Therefore, financial resources will tend to flow across borders. The core of international finance is the study of these flows, the markets where this activity takes place, the impacts these flows have on economic behavior, and the interaction between these flows and economic policy. The purpose of ...

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