INTERNATIONAL FINANCIAL THEORIES AND GLOBALIZATION
Abstract
The article analyses international finance as the branch of economics that studies the dynamics of exchange rates, foreigninvestment, global financial system, and how these affect international trade. It also studies international projects, internationalinvestments and capital flows, and trade deficits. It includes the study of futures, options and currency swaps.The article reviews several important theories in international finance including the Mundell-Fleming model, the optimumcurrency area (OCA) theory, as well as the purchasing power parity (PPP) theory. Whereas international trade theory makes useof mostly microeconomic methods and theories, international finance theory makes use of predominantly macroeconomicmethods and concepts.Key words: international finance, international financial theories, Mundell-Fleming model, optimum currency area (OCA)theory, purchasing power parity (PPP) theory.References
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