Table of Contents

Table of Contents

Chapter 1. Introduction
What Is International Economics About?
International Economics: Trade and Money


PartI.International Trade Theory

Chapter 2. World Trade: An Overview
Who Trades with Whom?
The Changing Pattern of World Trade
Do Old Rules Still Apply?

Chapter 3. Labor Productivity and Comparative Advantage: The Ricardian Model
The Concept of Comparative Advantage
A One-Factor Economy
Trade in a One-Factor World
Misconceptions About Comparative Advantage
Comparative Advantage with Many Goods
Adding Transport Costs and Nontraded Goods
Empirical Evidence on the Ricardian Model

Chapter 4. Resources, Comparative Advantage, and Income Distribution
A Model of a Two-Factor Economy
Effects of International Trade Between Two-Factor Economies
The Political Economy of Trade: A Preliminary View
Empirical Evidence on the Heckscher-Ohlin Model
Appendix: Factor Prices, Goods Prices, and Input Choices

Chapter 5. The Standard Trade Model
A Standard Model of a Trading Economy
International Transfers of Income: Shifting of the RD Curve
Tariffs and Export Subsidies: Simultaneous Shifts in RS and RD
Appendix: Representing International Equilibrium with Other Curves

Chapter 6. Economies of Scale, Imperfect Competition, and International Trade
Economies of Scale and International Trade: An Overview
Economies of Scale and Market Structure
The Theory of Imperfect Competition
Monopolistic Competition and Trade
Dumping
The Theory of External Economies
External Economies and International Trade
Economic Geography and Interregional Trade
Appendix: Determining Marginal Revenue

Chapter 7. International Factor Movements
International Labor Mobility
International Borrowing and Lending
Direct Foreign Investment and Multinational Firms
Appendix 1: Finding Total Output from the Marginal Product Curve
Appendix 2: More on Intertemporal Trade


Part II. International Trade Policy

Chapter 8. The Instruments of Trade Policy
Basic Tariff Analysis
Costs and Benefits of a Tariff
Other Instruments of Trade Policy
The Effects of Trade Policy: A Summary
Appendix 1: Tariff Analysis in General Equilibrium
Appendix 2: Tariffs and Import Quotas in the Presence of Monopoly

Chapter 9. The Political Economy of Trade Policy
The Case for Free Trade
National Welfare Arguments Against Free Trade
Income Distribution and Trade Policy
International Negotiations and Trade Policy
The Doha Disappointment
Appendix: Proving That the Optimum Tariff Is Positive

Chapter 10. Trade Policy in Developing Countries
Import-Substituting Industrialization
Results of Favoring Manufacturing: Problems of Import-Substituting Industrialization
Trade Liberalization Since 1985
Export-Oriented Industrialization: The East Asian Miracle

Chapter 11. Controversies in Trade Policy
Sophisticated Arguments for Activist Trade Policy
Globalization and Low-Wage Labor
Globalization and the Environment


Part III. Exchange Rates and Open-Economy Macroeconomics

Chapter 12. National Income Accounting and the Balance of Payments
The National Income Accounts
National Income Accounting for an Open Economy
The Balance of Payments Accounts

Chapter 13. Exchange Rates and the Foreign Exchange Market: An Asset Approach
Exchange Rates and International Transactions
The Foreign Exchange Market
The Demand for Foreign Currency Assets
Equilibrium in the Foreign Exchange Market
Interest Rates, Expectations, and Equilibrium
Appendix: Forward Exchange Rates and Covered Interest Parity

Chapter 14. Money, Interest Rates, and Exchange Rates
Money Defined: A Brief Review
The Demand for Money by Individuals
Aggregate Money Demand
The Equilibrium Interest Rate: The Interaction of Money Supply and Demand
The Money Supply and the Exchange Rate in the Short Run
Money, the Price Level, and the Exchange Rate in the Long Run
Inflation and Exchange Rate Dynamics

Chapter 15. Price Levels and the Exchange Rate in the Long Run
The Law of One Price
Purchasing Power Parity
A Long-Run Exchange Rate Model Based on PPP
Empirical Evidence on PPP and the Law of One Price
Explaining the Problems with PPP
Beyond Purchasing Power Parity: A General Model of Long-Run Exchange Rates
International Interest Rate Differences and the Real Exchange Rate
Real Interest Parity
Appendix: The Fisher Effect, the Interest Rate, and the Exchange Rate Under the Flexible-Price Monetary Approach

Chapter 16. Output and the Exchange Rate in the Short Run
Determinants of Aggregate Demand in an Open Economy
The Equation of Aggregate Demand
How Output Is Determined in the Short Run
Output Market Equilibrium in the Short Run: The DD Schedule
Asset Market Equilibrium in the Short Run: The AA Schedule
Short-Run Equilibrium for an Open Economy: Putting the DD and AA Schedules Together
Temporary Changes in Monetary and Fiscal Policy
Inflation Bias and Other Problems of Policy Formulation
Permanent Shifts in Monetary and Fiscal Policy
Macroeconomic Policies and the Current Account
Gradual Trade Flow Adjustments and Current Account Dynamics
Appendix 1: Intertemporal Trade and Consumption Demand
Appendix 2: The Marhsall-Lerner Condition and Empirical Estimates of Trade Elasticities

Chapter 17. Fixed Exchange Rates and Foreign Exchange Intervention
Why Study Fixed Exchange Rates?
Central Bank Intervention and the Money Supply
How the Central Bank Fixes the Exchange Rate
Stabilization Policies with a Fixed Exchange Rate
Balance of Payments Crises and Capital Flight
Managed Floating and Sterilized Intervention
Reserve Currencies in the World Monetary System
The Gold Standard
Appendix 1: Equilibrium in the Foreign Exchange Market with Imperfect Asset Substitutability
Appendix 2: The Timing of Balance of Payments Crises


Part IV. International Macroeconomic Policy

Chapter 18. The International Monetary System, 1870–1973
The Interwar Years, 1918–1939
The Bretton Woods System and the International Monetary Fund
Analyzing Policy Options Under the Bretton Woods System
The External Balance Problem of the United States
Worldwide Inflation and the Transition to Floating Rates

Chapter 19. Macroeconomic Policy and Coordination Under Floating Exchange Rates
The Case for Floating Exchange Rates
The Case Against Floating Exchange Rates
Macroeconomic Interdependence Under a Floating Rate
What Has Been Learned Since 1973?
Are Fixed Exchange Rates Even an Option for Most Countries?
Directions for Reform
Appendix: International Policy Coordination Failures

Chapter 20. Optimum Currency Areas and the European Experience
How the European Single Currency Evolved
The Euro and Economic Policy in the Euro Zone
The Theory of Optimum Currency Areas
The Future of EMU

Chapter 21. The Global Capital Market: Performance and Policy Problems
The International Capital Market and the Gains from Trade
International Banking and the International Capital Market
Regulating International Banking

Chapter 22. Developing Countries: Growth, Crisis, and Reform
Income, Wealth, and Growth in the World Economy
Structural Features of Developing Countries
Developing-Country Borrowing and Debt
East Asia: Success and Crisis
Lessons of Developing-Country Crises
Reforming the World’s Financial “Architecture”
Understanding Global Capital Flows and the Global Distribution of Income: Is Geography Destiny?


Mathematical Postscripts