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"This book deals with the financial side of international economics and covers all aspects of international finance. There are many books and articles by exponents of alternative points of view. I know of no other book that provides the scope, balance, objectivity and rigor of this book." (the late Professor Jerome L. Stein, Brown University)§ This§rigorous textbook tames technicalities and makes even the most complex models§accessible to students. Its unique two-tier structure makes the book attractive§for undergraduates, graduates and researchers alike. In fact, the coverage is§primarily directed to undergraduate students and is mainly confined to graphic§analysis and to some elementary algebra. Further, each chapter has its own§mathematical appendix, in which (i) the topics treated in the text are examined§at a level suitable for advanced undergraduates, graduates and researchers, and§(ii) generalizations and/or topics not treated in the text (including some at§the cutting edge of research) are formally examined. The new edition has been thoroughly revised and updated to reflect the§latest research on international finance.§