Includes bibliographical references (p. [405]-439) and index.

Introduction : some basic concepts and stylised facts and the case for (and against) floating exchange rates -- Purchasing power parity and the PPP puzzle -- The economics of the PPP puzzle -- The flexible price monetary model -- The sticky price monetary model -- The monetary approach to the exchange rate : an empirical perspective -- Currency substitution models and the portfolio balance approach to the exchange rate -- Real exchange rate determination : theory and evidence -- Equilibrium exchange rates : measurement and misalignment -- The new open economy macroeconomics and exchange rate behaviour -- The new open economy macroeconomics model : pricing to market and exchange rate volatility redux -- The economics of fixed exchange rates, part 1: target zone models -- The economics of fixed exchange rates, part 2: speculative attack models and contagion -- The market microstructure approach to the foreign exchange market -- Spot and forward exchange rates and the forward premium puzzle.