International economics : theory and policy

By: Krugman, Paul RContributor(s): Obstfeld, MauriceMaterial type: TextTextPublication details: Delhi : Addison Wesley Longman., 2000Description: xxx, 750 p. : illustrationsISBN: 0321033876 ; 9780321033871; 9788178080796 ; 8178080796Subject(s): International economic relations | International finance | Real foreign trade theory | International credit market | Foreign Trade PolicyDDC classification: 337
Contents:
International Economics: Trade and Money 8 -- Part I International Trade Theory 9 -- 2 Labor Productivity and Comparative Advantage: The Ricardian Model 11 -- Concept of Comparative Advantage 12 -- A One-Factor Economy 13 -- Trade in a One-Factor World 15 -- Misconceptions about Comparative Advantage 23 -- Box: Do Wages Reflect Productivity? 25 -- Comparative Advantage with Many Goods 26 -- Adding Transport Costs and Nontraded Goods 30 -- Empirical Evidence on the Ricardian Model 31 -- 3 Specific Factors and Income Distribution 37 -- Specific Factors Model 38 -- Box: What Is a Specific Factor? 39 -- International Trade in the Specific Factors Model 49 -- Income Distribution and the Gains from Trade 53 -- Political Economy of Trade: A Preliminary View 56 -- Box: Specific Factors and the Beginnings of Trade Theory 58 -- Appendix Further Details on Specific Factors 62 -- 4 Resources and Trade: The Heckscher-Ohlin Model 66 -- A Model of a Two-Factor Economy 67 -- Effects of International Trade Between Two-Factor Economies 75 -- Case Study: North-South Trade and Income Inequality 79 -- Empirical Evidence on the Heckscher-Ohlin Model 81 -- Appendix Factor Prices, Goods Prices, and Input Choices 88 -- 5 Standard Trade Model 92 -- A Standard Model of a Trading Economy 93 -- Case Study: Has the Growth of Newly Industrializing Countries Hurt Advanced Nations? 102 -- International Transfers of Income: Shifting the RD Curve 103 -- Case Study: The Transfer Problem and the Asian Crisis 107 -- Tariffs and Export Subsidies: Simultaneous Shifts in RS and RD 108 -- Appendix Representing International Equilibrium with Offer Curves 116 -- 6 Economies of Scale, Imperfect Competition, and International Trade 119 -- Economies of Scale and International Trade: An Overview 119 -- Economies of Scale and Market Structure 121 -- Theory of Imperfect Competition 122 -- Monopolistic Competition and Trade 131 -- Case Study: Intraindustry Trade in Action: The North American Auto Pact of 1964 140 -- Dumping 141 -- Case Study: Antidumping as Protectionism 144 -- Theory of External Economies 146 -- External Economies and International Trade 149 -- Box: Tinseltown Economics 152 -- Appendix Determining Marginal Revenue 157 -- 7 International Factor Movements 159 -- International Labor Mobility 160 -- Case Study: Wage Convergence in the Age of Mass Migration 164 -- Case Study: Immigration and the U.S. Economy 165 -- International Borrowing and Lending 167 -- Direct Foreign Investment and Multinational Firms 169 -- Box: Does Capital Movement to Developing Countries Hurt Workers in High-Wage Countries? 170 -- Case Study: Foreign Direct Investment in the United States 175 -- Box: Japan in the Entertainment Business 177 -- Appendix More on Intertemporal Trade 181 -- Part II International Trade Policy 185 -- 8 Instruments of Trade Policy 187 -- Basic Tariff Analysis 187 -- Costs and Benefits of a Tariff 193 -- Other Instruments of Trade Policy 197 -- Case Study: Europe's Common Agricultural Policy 199 -- Case Study: An Import Quota In Practice: U.S. Sugar 201 -- Case Study: A Voluntary Export Restraint in Practice: Japanese Autos 204 -- Box: American Buses, Made in Hungary 205 -- Effects of Trade Policy: A Summar 206 -- Appendix I Tariff Analysis in General Equilibrium 210 -- Appendix II Tariffs and Import Quotas in the Presence of Monopoly 214 -- 9 Political Economy of Trade Policy 218 -- Case for Free Trade 218 -- Case Study: The Gains from 1992 221 -- National Welfare Arguments Against Free Trade 223 -- Box: Market Failures Cut Both Ways: The Case of California 228 -- Income Distribution and Trade Policy 229 -- International Negotiations and Trade Policy 233 -- Box: Environmentalism or Protectionism 237 -- Box: Free Trade Area Versus Customs Union 242 -- Box: Do Trade Preferences Have Appeal 244 -- Case Study: Trade Diversion in South America 244 -- Appendix Proving that the Optimum Tariff Is Positive 250 -- 10 Trade Policy in Developing Countries 254 -- Import-Substituting Industrialization 255 -- Case Study: The End of Import Substitution in Chile 259 -- Problems of the Dual Economy 262 -- Case Study: Economic Dualism in India 263 -- Export-Oriented Industrialization: The East Asian Miracle 266 -- Box: China's Boom 269 -- 11 Strategic Trade Policies in Advanced Countries 275 -- Do Nations Compete? 275 -- Sophisticated Arguments for Strategic Trade Policy 279 -- Strategic Trade Policy in Practice 285 -- Box: An Initiative That Fell Flat 288 -- Case Studies of Strategic Trade Policies 289 -- Case Study: Japanese Targeting of Steel (1960-Early 1970s) 290 -- Case Study: European Support of Aircraft 291 -- Case Study: Japanese Targeting of Semiconductors (since the Mid-1970s) 292 -- Part III Exchange Rates and Open-Economy Macroeconomics 297 -- 12 National Income Accounting and the Balance of Payments 299 -- National Income Accounts 300 -- National Income Accounting for an Open Economy 304 -- Case Study: Do Government Budget Deficits Worsen the Current Account? 311 -- Balance of Payment Accounts 313 -- Box: The Mystery of the Missing Surplus 319 -- Case Study: Is the United States the World's Biggest Debtor? 321 -- 13 Exchange Rates and the Foreign Exchange Market: An Asset Approach 329 -- Exchange Rates and International Transactions 330 -- Foreign Exchange Market 333 -- Box: A Tale of Two Dollars 334 -- Demand for Foreign Currency Assets 339 -- Equilibrium in the Foreign Exchange Market 346 -- Interest Rates, Expectations, and Equilibrium 352 -- Box: The Perils of Forecasting Exchange Rates 354 -- Appendix Forward Exchange Rates and Covered Interest Parity 360 -- 14 Money, Interest Rates, and Exchange Rates 363 -- Money Defined: A Brief Review 364 -- Demand for Money by Individuals 365 -- Aggregate Money Demand 367 -- Equilibrium Interest Rate: The Interaction of Money Supply and Demand 368 -- Money Supply and the Exchange Rate in the Short Run 373 -- Money, the Price Level, and the Exchange Rate in the Long Run 378 -- Box: Inflation and Money-Supply Growth in Latin America 383 -- Inflation and Exchange Rate Dynamics 384 -- Box: Money Supply Growth and Hyperinflation in Bolivia 386 -- 15 Price Levels and the Exchange Rate in the Long Run 394 -- Law of One Price 395 -- Purchasing Power Parity 395 -- A Long-Run Exchange Rate Model Based on PPP 398 -- Empirical Evidence on PPP and the Law of One Price 406 -- Box: Some Meaty Evidence on the Law of One Price 408 -- Explaining the Problems with PPP 410 -- Box: Hong Kong's Surprisingly High Inflation 412 -- Case Study: Why Price Levels Are Lower in Poorer Countries 415 -- Beyond Purchasing Power Parity: A General Model of Long-Run Exchange Rates 416 -- Case Study: Why Does the Yen Keep Rising? 423 -- International Interest Rate Differences and the Real Exchange Rate 425 -- Real Interest Parity 427 -- Appendix Fisher Effect, the Interest Rate, and the Exchange Rate under the Flexible-Price Monetary Approach 434 -- 16 Output and the Exchange Rate in the Short Run 437 -- Determinants of Aggregate Demand in an Open Economy 438 -- Equation of Aggregate Demand 441 -- How Output Is Determined in the Short Run 442 -- Output Market Equilibrium in the Short Run: The DD Schedule 443 -- Asset Market Equilibrium in the Short Run: The AA Schedule 449 -- Short-Run Equilibrium for an Open Economy: Putting the DD and AA Schedules Together 452 -- Temporary Changes in Monetary and Fiscal Policy 454 -- Inflation Bias and Other Problems of Policy Formulation 459 -- Permanent Shifts in Monetary and Fiscal Policy 460 -- Macroeconomic Policies and the Current Account 465 -- Gradual Trade Flow Adjustment and Current Account Dynamics 466 -- Box:4 Korea's Trade Balance and the Won's Exchange Rate 469 -- Appendix I Is-LM Model and the DD-AA Model 474 -- Appendix II Intertemporal Trade and Consumption Demand 479 -- Appendix III Marshall-Lerner Condition and Empirical Estimates of Trade Elasticities 481 -- 17 Fixed Exchange Rates and Foreign Exchange Intervention 485 -- Why Study Fixed Exchange Rates? 485 -- Central Bank Intervention and the Money Supply 486 -- How the Central Bank Fixes the Exchange Rate 494 -- Stabilization Policies with a Fixed Exchange Rate 497 -- Balance of Payments Crises and Capital Flight 502 -- Managed Floating and Sterilized Intervention 505 -- Box: Mexico's 1994 Balance of Payments Crisis 506 -- Reserve Currencies in the World Monetary System 511 -- Gold Standard 513 -- Appendix I Equilibrium in the Foreign Exchange Market with Imperfect Asset Substitutability 521 -- Appendix II Monetary Approach to the Balance of Payments 524 -- Appendix III Timing of Balance of Payments Crises 526 -- Part IV International Macroeconomic Policy 531 -- 18 International Monetary System, 1870-1973 533 -- Macroeconomic Policy Goals in an Open Economy 534 -- International Macroeconomic Policy under the Gold Standard, 1870-1914 538 -- Box: Hume Versus the Mercantilists 542 -- Interwar Years, 1918-1939 542 -- Case Study: The International Gold Standard and the Great Depression 545 -- Bretton Woods System and the International Monetary Fund 546 -- Internal and External Balance under the Bretton Woods System 549 -- Analyzing Policy Options under the Bretton Woods System 551 -- External Balance Problem of the United States 556 -- Case Study: The Decline and Fall of the Bretton Woods System 557 -- Worldwide Inflation and the Transition to Floating Rates 561.
Summary: Krugman and Obstfeld provide a unified model of open-economy macroeconomics based upon an asset-market approach to exchange rate determination with a central role for expectations.
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Included Index.

International Economics: Trade and Money 8 --
Part I International Trade Theory 9 --
2 Labor Productivity and Comparative Advantage: The Ricardian Model 11 --
Concept of Comparative Advantage 12 --
A One-Factor Economy 13 --
Trade in a One-Factor World 15 --
Misconceptions about Comparative Advantage 23 --
Box: Do Wages Reflect Productivity? 25 --
Comparative Advantage with Many Goods 26 --
Adding Transport Costs and Nontraded Goods 30 --
Empirical Evidence on the Ricardian Model 31 --
3 Specific Factors and Income Distribution 37 --
Specific Factors Model 38 --
Box: What Is a Specific Factor? 39 --
International Trade in the Specific Factors Model 49 --
Income Distribution and the Gains from Trade 53 --
Political Economy of Trade: A Preliminary View 56 --
Box: Specific Factors and the Beginnings of Trade Theory 58 --
Appendix Further Details on Specific Factors 62 --
4 Resources and Trade: The Heckscher-Ohlin Model 66 --
A Model of a Two-Factor Economy 67 --
Effects of International Trade Between Two-Factor Economies 75 --
Case Study: North-South Trade and Income Inequality 79 --
Empirical Evidence on the Heckscher-Ohlin Model 81 --
Appendix Factor Prices, Goods Prices, and Input Choices 88 --
5 Standard Trade Model 92 --
A Standard Model of a Trading Economy 93 --
Case Study: Has the Growth of Newly Industrializing Countries Hurt Advanced Nations? 102 --
International Transfers of Income: Shifting the RD Curve 103 --
Case Study: The Transfer Problem and the Asian Crisis 107 --
Tariffs and Export Subsidies: Simultaneous Shifts in RS and RD 108 --
Appendix Representing International Equilibrium with Offer Curves 116 --
6 Economies of Scale, Imperfect Competition, and International Trade 119 --
Economies of Scale and International Trade: An Overview 119 --
Economies of Scale and Market Structure 121 --
Theory of Imperfect Competition 122 --
Monopolistic Competition and Trade 131 --
Case Study: Intraindustry Trade in Action: The North American Auto Pact of 1964 140 --
Dumping 141 --
Case Study: Antidumping as Protectionism 144 --
Theory of External Economies 146 --
External Economies and International Trade 149 --
Box: Tinseltown Economics 152 --
Appendix Determining Marginal Revenue 157 --
7 International Factor Movements 159 --
International Labor Mobility 160 --
Case Study: Wage Convergence in the Age of Mass Migration 164 --
Case Study: Immigration and the U.S. Economy 165 --
International Borrowing and Lending 167 --
Direct Foreign Investment and Multinational Firms 169 --
Box: Does Capital Movement to Developing Countries Hurt Workers in High-Wage Countries? 170 --
Case Study: Foreign Direct Investment in the United States 175 --
Box: Japan in the Entertainment Business 177 --
Appendix More on Intertemporal Trade 181 --
Part II International Trade Policy 185 --
8 Instruments of Trade Policy 187 --
Basic Tariff Analysis 187 --
Costs and Benefits of a Tariff 193 --
Other Instruments of Trade Policy 197 --
Case Study: Europe's Common Agricultural Policy 199 --
Case Study: An Import Quota In Practice: U.S. Sugar 201 --
Case Study: A Voluntary Export Restraint in Practice: Japanese Autos 204 --
Box: American Buses, Made in Hungary 205 --
Effects of Trade Policy: A Summar 206 --
Appendix I Tariff Analysis in General Equilibrium 210 --
Appendix II Tariffs and Import Quotas in the Presence of Monopoly 214 --
9 Political Economy of Trade Policy 218 --
Case for Free Trade 218 --
Case Study: The Gains from 1992 221 --
National Welfare Arguments Against Free Trade 223 --
Box: Market Failures Cut Both Ways: The Case of California 228 --
Income Distribution and Trade Policy 229 --
International Negotiations and Trade Policy 233 --
Box: Environmentalism or Protectionism 237 --
Box: Free Trade Area Versus Customs Union 242 --
Box: Do Trade Preferences Have Appeal 244 --
Case Study: Trade Diversion in South America 244 --
Appendix Proving that the Optimum Tariff Is Positive 250 --
10 Trade Policy in Developing Countries 254 --
Import-Substituting Industrialization 255 --
Case Study: The End of Import Substitution in Chile 259 --
Problems of the Dual Economy 262 --
Case Study: Economic Dualism in India 263 --
Export-Oriented Industrialization: The East Asian Miracle 266 --
Box: China's Boom 269 --
11 Strategic Trade Policies in Advanced Countries 275 --
Do Nations Compete? 275 --
Sophisticated Arguments for Strategic Trade Policy 279 --
Strategic Trade Policy in Practice 285 --
Box: An Initiative That Fell Flat 288 --
Case Studies of Strategic Trade Policies 289 --
Case Study: Japanese Targeting of Steel (1960-Early 1970s) 290 --
Case Study: European Support of Aircraft 291 --
Case Study: Japanese Targeting of Semiconductors (since the Mid-1970s) 292 --
Part III Exchange Rates and Open-Economy Macroeconomics 297 --
12 National Income Accounting and the Balance of Payments 299 --
National Income Accounts 300 --
National Income Accounting for an Open Economy 304 --
Case Study: Do Government Budget Deficits Worsen the Current Account? 311 --
Balance of Payment Accounts 313 --
Box: The Mystery of the Missing Surplus 319 --
Case Study: Is the United States the World's Biggest Debtor? 321 --
13 Exchange Rates and the Foreign Exchange Market: An Asset Approach 329 --
Exchange Rates and International Transactions 330 --
Foreign Exchange Market 333 --
Box: A Tale of Two Dollars 334 --
Demand for Foreign Currency Assets 339 --
Equilibrium in the Foreign Exchange Market 346 --
Interest Rates, Expectations, and Equilibrium 352 --
Box: The Perils of Forecasting Exchange Rates 354 --
Appendix Forward Exchange Rates and Covered Interest Parity 360 --
14 Money, Interest Rates, and Exchange Rates 363 --
Money Defined: A Brief Review 364 --
Demand for Money by Individuals 365 --
Aggregate Money Demand 367 --
Equilibrium Interest Rate: The Interaction of Money Supply and Demand 368 --
Money Supply and the Exchange Rate in the Short Run 373 --
Money, the Price Level, and the Exchange Rate in the Long Run 378 --
Box: Inflation and Money-Supply Growth in Latin America 383 --
Inflation and Exchange Rate Dynamics 384 --
Box: Money Supply Growth and Hyperinflation in Bolivia 386 --
15 Price Levels and the Exchange Rate in the Long Run 394 --
Law of One Price 395 --
Purchasing Power Parity 395 --
A Long-Run Exchange Rate Model Based on PPP 398 --
Empirical Evidence on PPP and the Law of One Price 406 --
Box: Some Meaty Evidence on the Law of One Price 408 --
Explaining the Problems with PPP 410 --
Box: Hong Kong's Surprisingly High Inflation 412 --
Case Study: Why Price Levels Are Lower in Poorer Countries 415 --
Beyond Purchasing Power Parity: A General Model of Long-Run Exchange Rates 416 --
Case Study: Why Does the Yen Keep Rising? 423 --
International Interest Rate Differences and the Real Exchange Rate 425 --
Real Interest Parity 427 --
Appendix Fisher Effect, the Interest Rate, and the Exchange Rate under the Flexible-Price Monetary Approach 434 --
16 Output and the Exchange Rate in the Short Run 437 --
Determinants of Aggregate Demand in an Open Economy 438 --
Equation of Aggregate Demand 441 --
How Output Is Determined in the Short Run 442 --
Output Market Equilibrium in the Short Run: The DD Schedule 443 --
Asset Market Equilibrium in the Short Run: The AA Schedule 449 --
Short-Run Equilibrium for an Open Economy: Putting the DD and AA Schedules Together 452 --
Temporary Changes in Monetary and Fiscal Policy 454 --
Inflation Bias and Other Problems of Policy Formulation 459 --
Permanent Shifts in Monetary and Fiscal Policy 460 --
Macroeconomic Policies and the Current Account 465 --
Gradual Trade Flow Adjustment and Current Account Dynamics 466 --
Box:4 Korea's Trade Balance and the Won's Exchange Rate 469 --
Appendix I Is-LM Model and the DD-AA Model 474 --
Appendix II Intertemporal Trade and Consumption Demand 479 --
Appendix III Marshall-Lerner Condition and Empirical Estimates of Trade Elasticities 481 --
17 Fixed Exchange Rates and Foreign Exchange Intervention 485 --
Why Study Fixed Exchange Rates? 485 --
Central Bank Intervention and the Money Supply 486 --
How the Central Bank Fixes the Exchange Rate 494 --
Stabilization Policies with a Fixed Exchange Rate 497 --
Balance of Payments Crises and Capital Flight 502 --
Managed Floating and Sterilized Intervention 505 --
Box: Mexico's 1994 Balance of Payments Crisis 506 --
Reserve Currencies in the World Monetary System 511 --
Gold Standard 513 --
Appendix I Equilibrium in the Foreign Exchange Market with Imperfect Asset Substitutability 521 --
Appendix II Monetary Approach to the Balance of Payments 524 --
Appendix III Timing of Balance of Payments Crises 526 --
Part IV International Macroeconomic Policy 531 --
18 International Monetary System, 1870-1973 533 --
Macroeconomic Policy Goals in an Open Economy 534 --
International Macroeconomic Policy under the Gold Standard, 1870-1914 538 --
Box: Hume Versus the Mercantilists 542 --
Interwar Years, 1918-1939 542 --
Case Study: The International Gold Standard and the Great Depression 545 --
Bretton Woods System and the International Monetary Fund 546 --
Internal and External Balance under the Bretton Woods System 549 --
Analyzing Policy Options under the Bretton Woods System 551 --
External Balance Problem of the United States 556 --
Case Study: The Decline and Fall of the Bretton Woods System 557 --
Worldwide Inflation and the Transition to Floating Rates 561.

Krugman and Obstfeld provide a unified model of open-economy macroeconomics based upon an asset-market approach to exchange rate determination with a central role for expectations.

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