This volume contains Parts, I, II, and III of Asset Markets, Exchange Rates, and Economic Integration: A Synthesis, which was published in 1980. They are being reissued under a new title because readers and reviewers have convinced us that the first parts of our book are of wide interest and should be made more readily available.

The three parts develop a model of a single, open economy, using an assetmarket approach to balance-of-payments analysis. Parts IV and V of the larger book take up questions of economic integration by expanding the model to include two countries that trade with each other and with the outside world. The Preface to that book explains how it evolved.

We have not changed the text of Parts I, II, and III for this edition, even though it includes occasional references to Parts IV and V of the larger work. Those references sometimes explain why we made certain assumptions and stressed certain issues. We also want to encourage readers to look at Parts IV and V.

We again express our thanks to colleagues who read and gave us comments on draft chapters. We are indebted to Alan Binder, Ralph Bryant, Willem Buiter, Rudiger Dornbusch, Jonathan Eaton, Jacob Frenkel, Stephen Goldfeld, Dwight Jaffee, the late Harry Johnson, Howard Kaufold, and Marina Whitman.