International finance

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Please help improve this article or section by expanding it. Further
information might be found on the talk page or at requests for expansion. (January
2007)
International finance is the branch of economics that studies the
dynamics of exchange rates, foreign investment, and how these affect
international trade. It also studies international projects, international
investments and capital flows, and trade deficits. It includes the study
of futures, options and currency swaps. Together with international
trade theory, international finance is also a branch of international
economics.
Some of the theories which are important in international finance
include the Mundell-Fleming model, the optimum currency area (OCA)
theory, as well as the purchasing power parity (PPP) theory. Moreover,
whereas international trade theory makes use of mostly
microeconomic methods and theories, international finance theory
makes use of predominantly intermediate and advanced
macroeconomic methods and concepts.