Part 1 Balance-of-payments accounting and the foreign-exchange market: concepts of the balance of payments; the accounting balance of payments; balance-of-payments equilibrium; more on the concept of equilibrium; the foreign-exchange market; the demand for dollars; the supply of dollars; capital movements and speculation; the forward rate of exchange; types of exchange-rate regime; fixed versus flexible exchange rates; exchange rate reform. Part 2 The capital account of the balance of payments: the components of the capital account; official reserves; special drawing rights; the balancing item; the capital account and the net external wealth of the UK. Part 3 Exchange rate determination: theories of exchange rate determination; purchasing power parity; current balance model; the importance of theories of expectations formation; the Mundell-Fleming model; exchange rate overshooting models; the portfolio model of exchange rate determination; speculatice bubble models of exchange rate determination; exchange rate determination - what have we learnt?; exchange rate systems and policies; fixed versus flexible exchange rates; types of exchange rate regime; controls on capital movements; exchange rate policy in the 1990s. Part 4 The balance of payments and the national economy: the integration of the balance of payments into the nationnal accounts; the conflict between balance-of-payments equilibrium and other objectives of economic policy; income equilibrium in an open economy and the foreign-trade mulitplier; the foreign-trade multiplier relating imports to expenditure; the \'new\' foreign-trade multiplier with foreign repercussions; balance-of-payments adjustment; the classical price-specie flow mechanism; the elasticity approach; the absorption approach; the monetary approach. Part 5 The elasticity approach to the balance of payments: the Marshall-Lerner condition derived; devaluation and the response of firms; lags and the J-curve effect; devaluation and inflation; payments imbalance in the World economy; devaluation and the terms of trade; the difficulties of measuring price elasticities. Part 6 The absorption approach to the balance of payments: the direct effect of devaluation on income; the direct effect of devaluation on absorption; the interaction between changes in income and changes in absorption; strengths and dangers of the absorption approach; the monetary aspects of balance-of-payments deficits; domestic credit expansion. Part 7 The monetary approach to the balance of payments. Part 8 Simultaneous internal and external balance: internal and external balance under flexible exchange rates with no capital movements; internal and external balance under fixed exchange rate woth capital movementsl internal and external balance in an IS-LM curve framework; the use of monetary and fiscal policy under alternative exchange-rate regimes; the assignment of policies in the United Kingdom. (part contents).