Norman Miller provides a fresh perspective on balance of payments and exchange rate theories, including intertemporal open economy models that focus on the optimum current account. To this end, he proves that any non-zero balance of payments must always be associated with a disequilibrium in either a commodity or an asset market. In this rigorous yet readable book, important welfare and policy implications are carefully examined. Norman Miller develops a new theory of the balance of payments associated with commodity market disequilibrium, a loanable funds theory of exchange rate and a modern foreign exchange market theory of the exchange rate that incorporates capital flows.The book also details 15 puzzling facts associated with open economies and the FX market. After reviewing existing explanations to these puzzles, the author shows how each of the above new theories provides new, often unified solutions to them. International finance practitioners, students and scholars of economics and finance, and MBA students will all find this book fresh and enlightening.