International Finance: Theory and Policy

Reviewed by Rajeeb Poudel, Assistant Professor, Western Oregon University on 6/16/21

Comprehensiveness rating: 4 see less

The book does cover most of the concepts. It gives due justice to concepts such as Trade Imbalances, Purchasing Power Parity, Interest Rate Parity, Interest Rate Determination, Fixed and Floating Exchange Rates, and Interest Arbitrages. Some of the topics that I cover but are missing from the book are: Foreign Currency Derivatives and Foreign Exchange Pass Through. I wish that the book delved deeper into the quantitative aspects of the concepts. There are very few numerical examples and very few numerical problems in exercises.

Content Accuracy rating: 5

The text is accurate in its explanation of the materials. Some of the links provided in the texts are not accessible anymore. (e.g., the link to spreadsheet, available on Bureau of Economic Analysis (BEA), site provided on page 104.)

Relevance/Longevity rating: 5

The book provides many numbers such as the GDP per capita for a country, inflation rates, which may become obsolete after some time. Also, with the everchanging nature of global economy and new events (such as Brexit), some concepts may require a fresh examination. Also, as noted previously, the book has has some broken links.

Clarity rating: 5

The concepts are mostly clear, though it could use more visuals (images, etc.) to make it more comprehensible. A little more examination of the numerical aspects of some concepts (like arbitrage) would make the analyses more convincing.

Consistency rating: 5

The text is internally consistent in terms of terminology and framework.

Modularity rating: 5

The material is mostly organized well. The book could use more images, graphs, and tables to complement the text, mainly in the first few chapters. The book is divided into 13 chapters, and each chapter is further divided into several subsections. There is a “Key Takeaway” section and exercise at the end of each of these subsections. This allows for students to gauge their understanding of materials covered in the subsection as soon as they are done with that subsection. The book I accessed is in PDF format. So, for those who feel comfortable with PDF documents in general, this book is very easy to use. It has the Table of Content for each chapter and each subsection that can be easily accessed via the links in the table.

Organization/Structure/Flow rating: 5

The book is organized well. It first goes into the basics of international finance, such as GDP, Foreign Exchange Rates, and Balance of Payments, and then moves on to more advanced concepts such as Interest Rate Parity, Purchasing Power Parity, and Fixed vs. Floating Exchange Rates. There is a good flow in the presentation of subsections within each of the chapters.

Interface rating: 4

The book feels monotonous at times in that it is presented like a research paper with just texts after texts with not much opportunity for interaction or enquiry. Would be better if the author incorporated analysis of cases and current events shaping the world markets. Plus, the tables could use more formatting and could be more colorful.

Grammatical Errors rating: 5

I didn't notice any grammatical issues, and if there is any, it is not at all significant.

Cultural Relevance rating: 5

I didn't find the text to be culturally insensitive or offensive in any way.

Comments

This book is a great first international finance textbook. The few issues that I have noted do not deter me from recommending this book in addition to another book that I am using. But if this book is used alone, it may need to be supplemented with additional notes, cases, and discussion of current events shaping the world markets. Thanks to the author for making this an open textbook!

Reviewed by Yihong Xiao, Assistant Professor, Bridgewater State University on 6/29/20

Comprehensiveness rating: 3 see less

This textbook provides thorough explanations of various topics, such as trade imbalance, exchange rate systems, IRP, and PPP, etc. However, it does not cover the exchange rate risk management, which is a major part that I usually cover in my course.

Content Accuracy rating: 5

The content is accurate and unbiased.

Relevance/Longevity rating: 4

Many tables in this textbook need to be updated with more current data. With the link provided, it should be relatively easy.
It would be preferred if the author can incorporate more recent issues into the discussion of the textbook, such as "trade war" and "Brexit", etc.

Clarity rating: 5

The textbook is well written with ample examples explaining any jargon/technical terminology.

Consistency rating: 5

The text is internally consistent. It gradually builds up the concepts needed for future chapters.

Modularity rating: 5

The text is divided into chapters and subchapters. Within each subchapter, it starts with learning objectives and concludes with key takeaways and exercises. Professors should be able to take some topics out and reorganize them to meet their own teaching purposes.

Organization/Structure/Flow rating: 5

The topics are organized in a logical and clear fashion.

Interface rating: 4

Some of the charts need to be edited to avoid breaking up the text (eg, p.117). Some of the equations are blurry (eg, p. 200).

Grammatical Errors rating: 5

There are no major grammatical errors.

Cultural Relevance rating: 5

The text is not culturally insensitive or offensive.

Comments

This textbook needs some updates to include current issues in the international financial markets. It provides some good examples in explaining some major concepts. I would assign it as a supplementary textbook in my class, but may not use it as the required textbook for the following reasons: 1. it lacks some important topics (exchange rate risk management) that we cover in class, 2. it does not come with any instructor resources, such as a test bank, instructor manuals, PowerPoint slides, etc.

Reviewed by Lina Zhou, Associate Professor, Augustana College on 11/13/18

Comprehensiveness rating: 4 see less

The textbook covers almost all the content that I usually cover in my International Finance class. I wish the specific chapter/section's content would be more comprehensive. For example, for the balance of payments account, I prefer that students see the IMF framework of four categories and the general definition on debit and credit entries. The author did provide a good, comprehensive example.

Content Accuracy rating: 5

I found only few typos.

Relevance/Longevity rating: 4

The textbook used examples and recent data to demonstrate theoretical models, which makes it easy to digest but requires more updates. The data sources are listed in the textbook so update is not difficult but it may affect the arguments.

Clarity rating: 5

The text is very readable. The examples make difficult concepts and models understandable in an enjoyable way. The text also clarified misconceptions seen in media and held by students. Good job!

Consistency rating: 5

The text is internally consistent in terms of terminology and framework. It flows.

Modularity rating: 3

The text divisible enough. I may even combine some sections.

Organization/Structure/Flow rating: 5

The topics in the text are presented in a logical and clear fashion. It is easy to follow.

Interface rating: 5

The text is free of significant interface issues.

Grammatical Errors rating: 5

There is no major grammatical errors.

Cultural Relevance rating: 5

The text is fair and objective, not culturally offensive at all.

Comments

This book is more readable for undergraduate students than the one I have been using in my International Finance class in the past 10 years. It is not heavily model intensive and it is not purely narrative either. It covers major topics in International Finance in an logical order. It uses recent data to demonstrate concepts and relations.
My reservations are: 1. Topics are broken down in too small/short sections that I wish the discussion could continue . 2. I wish it came with a test bank. As of now, I would like to assign a few chapters/sections for students to read then discuss in class but may not completely switch to this book as the required textbook.

Reviewed by Mark Gibson, Clinical Assistant Professor, Washington State University on 6/20/17

Comprehensiveness rating: 4 see less

The text is fairly comprehensive. It covers all the major areas of international finance and uses standard economic concepts and models. I think students would enjoy the chapter discussing the welfare effects of trade imbalances, which is well done with clear examples. Those who are interested in details of the foreign exchange market itself will have to look elsewhere. While interest rate parity is given a chapter, the concept of covered interest parity is only mentioned in an exercise. I was surprised that the impossible trinity or trilemma was not mentioned even though the text devoted significant attention to the limits that a fixed exchange rate regime places on monetary autonomy. The text itself does not have a table of contents, but one is available in the bookmarks of the pdf file. The text does not have a glossary, but the pdf file is easy to search. I did not see any additional instructor resources, such as an instructor's manual, a test bank, or lecture slides.

Content Accuracy rating: 5

The content is generally accurate aside from minor typos and provides a balanced, unbiased approach to the major issues.

Relevance/Longevity rating: 4

The text is focused primarily on the major economic concepts, which gives it longevity. The data used in the text only go up to around 2008. In most cases, however, there are working links to the data sources in the pdf file that would allow a reader to obtain updated data without too much hassle. It would be nice to have more coverage of recent issues to give the text greater relevance to students.

Clarity rating: 5

The text is clear and well written with many helpful examples.

Consistency rating: 5

The text is internally consistent. The macroeconomic approach developed and applied is the AA-DD model. The text gradually builds up to that model and applies it consistently.

Modularity rating: 5

The chapters are all divided into short sections, which makes it easy to choose among topics within a chapter. Many of the chapters are building up to the AA-DD model, which is then applied for a number of chapters, so it would not be a good idea to skip any of the major building blocks altogether.

Organization/Structure/Flow rating: 5

The topics are laid out in a natural way and flow well together.

Interface rating: 1

My major issue with the book is the interface. The text, tables, and figures in the pdf file are not typeset in a very professional manner. I found this to be a significant distraction and I think it would really turn students off. The graphical analyses and equations in a text like this are especially important, but they are not clearly presented here. The equations are either not properly typeset or are blurry. This could be a major roadblock for students, many of whom are uncomfortable with equations. The diagrams leave a lot to be desired and I think students would have trouble following the 3-D diagrams of the AA-DD model.

Grammatical Errors rating: 5

There are no major grammatical problems with the text.

Cultural Relevance rating: 5

The text is not culturally insensitive or offensive in any way.

Comments

I think the content itself is of high quality, but I would hesitate to assign this book to students because of the serious issues with the interface.