Equilibrium-exchange Books

This book is worth the price if only for the paper by Ed Green, which has, with a slight delay, spawned a huge literature in dynamic contract theory. Chapters V and VI, by Townsend and Wallace and Beveniste, will also be looked back upon as neglected early work. Jacklin's paper was quite important as well.

This title features Stein's years of collaborative work with his colleague Wendell Fleming from the mathematics department of the same university. The central focus of the book is on the use of optimal control and dynamic programming methodology to international finance issues such as finding the optimal debt for a country as well as deriving a theoretically based measure of a misaligned exchange rate. Since both of these are of paramount importance in assessing the probability of debt and/or exchange rate crises, the book opens up new avenues for research in related areas. On the other hand, the book also underlines the shortcomings of the intertemporal budget constraint(IBC) traditionally used in dynamic macroeconomics. Be warned that you need to have some preliminary exposure to optimal control and dynamic programming in order to grasp well the potential of the book. I must confess that after reading through Stein's articles and now his book, my enthusiasm about Obsfeld and Rogoff book has not been so lively as before.

A great book for academics or experts but as it was published in 1994 is now outdated. The book contains articles from leading experts on the methods of calculating, as the title suggests, equilibrium exchange rates. These explicitly move beyond just the PPP approach. These articles still provide useful background material for those wanting to understand the different methodologies.