The economics of exchange rates is an area within international finance which has generated and continues to generate strong excitement and interest among students, academics, policymakers and practitioners. The last fifteen years or so in particular have seen a great flurry of activity in exchange rate economics, with important contributions to exchange rate theory, empirics and policy. Much of this activity has been so revolutionary as to induce a significant change in the profession's way of thinking about the area. In this book – part monograph, part advanced textbook – we seek to provide an overview of the exchange rate literature, focusing largely but not exclusively on work produced within the last fifteen years or so, expositing, criticising and interpreting those areas which, in our view, are representative of the most influential contributions made by the profession in this context. Our overall aim is to assess where we stand in the continuing learning and discovery process as exchange rate economists. In doing so, we hope to provide a framework which will be useful to the economics and financial community as a whole for thinking about exchange rate issues. The monograph is intended to be wide-ranging and we have attempted to make chapters easy to follow and largely self-contained.

The primary target for the book is students taking advanced courses in international economics or international finance at about the level of a second-year US doctoral programme in economics or finance, although students at other levels, including master's degree students and advanced undergraduates, should also find the book accessible.