国际经济学

Brief Contents Chapter 1: Introduction Part One: International Trade Theory Chapter 2: The Law of Comparative Advantage Chapter 3: The Standard Theory of International Trade Chapter 4: Demand and Supply, Offer Curves, and the Terms of Trade Chapter 5: Factor Endowments and the Heckscher-Ohlin Theory Chapter 6: Economies of Scale, Imperfect Competition, and International Trade Chapter 7: Economic Growth and International Trade Part Two: International Trade Policy Chapter 8: Trade Restrictions: Tariffs Chapter 9: Nontariff Trade Barriers and the New Protectionism Chapter 10: Economic Integration: Customs Unions and Free Trade Areas Chapter 11: International Trade and Economic Development Chapter 12: International Resource Movements and Multinational Corporations Part Three: Foreign Exchange Markets, Exchange Rates, and the Balance of Payments Chapter 13: Foreign Exchange Markets and Exchange Rates Chapter 14: Balance of Payments Part Four: Open-Economy Macroeconomics: Adjustment in the Balance of Payments and Domestic Stability Chapter 15: The Price Adjustment Mechanism Under a Flexible and a Fixed Exchange Rate System Chapter 16: The Income Adjustment Mechanism and Synthesis of Automatic Adjustments Chapter 17: Open-Economy Macroeconomics: Adjustment Policies Chapter 18: Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply Chapter 19: The Monetary and Portfolio Balance Approaches Chapter 20: Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination Chapter 21: The International Monetary System: Past, Present, and Future Answers to Selected Problems Glossary of Key Terms Name Index Subject Index Contents Suggested core chapters and sections for a one-semester course in Interna- tional Economics for students with background in Principles of Economics only. CHAPTER 1 Introduction 1.1 The Importance of International Economics Case Study 1-1: Even the IBM PC Isn't All-American 1.2 International Trade and the Nation's Standard of Living Case Study 1 -2: The Rising Importance of International Trade to the United States 1.3 The Subject Matter of International Economics 1.4 The Purpose of International Economic Theories and Policies 1.5 Current International Economic Problems l.5a The Rising Trade Protectionism in Developed Countries l.5b The Excessive Flnrctuqtions and Large Disequilibria in Exchange Rates l.5c The High Stmctural Unemployment in Europe l.5d The Restructuring Problems Facing Eastern Europe and the Former Soviet Union l.5e The Deep Pnvfirtv of Some of the Poorest Developing Countries 1.6 Organization and Methodology of the Text l.6a Organization of the Text l.6b Methodology of the Text Summary ?A Look Ahead ?Key Tenns ?Questions for Review ?Problems Appendix: Al.l Basic Country Characteristics Al.2 Sources ofAdditional Intemational Data and Information Selected Bibliography PART ONE INTERNATIONAL TRADE THEORY CHAPTER 2 The Law of Comparative Advantage 2.1 Introduction 2.2 The Mercantilists' Views on Trade Case Study 2-1: Munn's Mercantilistic Views on Trade 2.3 Trade Based on Absolute Advantage: Adam Smith 2.3a Absolute Advantage 2.3b Illustration of Absolute Advantage 2.4 Trade Based on Comparative Advantage: David Ricardo 2.4a The Law of Comparative Advantage 2.4b The Gains from Trade 2.4c Exception to the Law of Comparative Advantage 2.4d Comparative Advantage with Money 2.5 Comparative Advantage and Opportunity Costs 2.5a Comparative Advantage and the Labor Theory of Value Case Study 2-2: The Petition of the Candlemakers 2.5b The Opportunity Cost Theory 2.5c The Production Possibility Frontier Under Constant Costs 2.5d Opportunity Costs and Relative Commodity Prices 2.6 The Basis for and the Gains from 'Trade Under Constant Costs 2.6a Illustration of the Gains from Trade 2.6b Relative Commodity Prices with Trade 2.7 Empirical Tests of the Ricardian Model Summary A Look Ahead Key Terms Questions for Review Problems Appendix: A2.1 Comparative Advantage with More Than Two Commodities A2.2 Comparative Advantage with More Than Two Nations Selected Bibliography CHAPTER 3 The Standard Theory of International Trade 3.1 Introduction 3.2 The Production Frontier with Increasing Costs 3.2a Illustration of Increasing Costs 3.2b The Marginal Rate of Transformation 3.2c Reasons for Increasing Opportunity Costs and Different Production Frontiers 3.3 Community Indifference Curves 3.3a Illustration of Community Indifference Curves 3.3b The Marginal Rate of Substitution 3.3c Some Difficulties with Community Indifference Curves 3.4 Equilibrium in Isolation 3.4a Illustration of Equilibrium in Isolation 3.4b Equilibrium Relative Commodity Prices and Comparative Advantage 3.5 The Basis for and the Gains from Trade with Increasing Costs 3.5a Illustrations of the Basis for and the Gains from Trade with Increasing Costs Case Study 3-1: Comparative Advantage of the United States, the European Union, and Japan 3.5b Equilibrium Relative Commoditv Prices with Trade 3.5c Incomplete Specialization 3.5d Small Country Case with Increasing Costs 3.5e The Gains from Exchange and from Specialization 3.6 Trade Based on Differences in Tastes Case Study 3-2: Reallocating Labor in the United States: Comparative Advantage at Work 3.6a Illustration ofTrade Based on Differences in Tastes Summary ?A Look Ahead Key Terms Questions for Review ?Problems Appendix: A3.1 Production Functions, Isoquants, Isocosts, and Equilibrium A3.2 Production Theory with Two Nations. Two Commodities, and Two Factors A3.3 Derivation of the Edgeworth Box Diagram and Production Frontiers A3.4 Some Important Conclusions Selected Bibliography CHAPTER 4 Demand and Supply, Offer Curves, and the Terms of Trade 4.1 Introduction 4.2 The Equilibrium Reiative Commodity Price with Trade--Partial Equilibrium Analysis 4.3 Offer Curves CONTENTS Case Study 4-1: The Index of Export to Import Prices for the United States 4.3a Origin and Definition of Offer Curves 4.3b Derivation and Shape of the Offer Curve of Nation 1 4.3c Derivation and Shape of the Offer Curve of Nation 2 4.4 The Equilibrium Relative Commodity Price with Trade-- General Equilibrium Analysis 4.5 Relationship Between General and Partial Equilibrium Analyses 4.6 The Terms of Trade 4.6a Definition and Measurement of the Terms of Trade 4.6b Illustration of the Terms of Trade 4.6c Usefulness of the Model Case Study 4-2: The Terms of Trade of Developing and Developed Countries Summary ?A Look Abead ?Key Terms ?Questions for Review ?Problems Appendix: A4.1 Derivation of a Trade Indifference Curve for Nation 1 A4.2 Derivation of Nation 1 's Trade Indifference Map A4.3 Formal Derivation of Nation l's Offer Curve A4.4 Outline of the Formal Derivation of Nation 2's Offer Curve A4.5 General Equilibrium of Production, Consumption, and Trade A4.6 Multiple and Unstable Equilibria Selected Bibliography CHAPTER 5 Factor Endowments and the Heckscher-Ohlin Theory 5.1 Introduction 5.2 Assumptions of the Theory 5.2a The Assumptions 5.2b Meaning of the Assumptions 5.3 Factor Intensity, Factor Abundance, and the Shape of the Production Frontier 5.3a Factor Intensity 5.3b Factor Abundance 5.3c Factor Abundance and the Shape of the Production Frontier Case Study 5-1: Relative Resource Endowments of Leading Industrial Countries Case Study 5-2: Capital-Labor Ratios of Selected Countries 5.4 Factor Endowments and the Heckscher-Ohlin Theory 5.4a The Heckscher-Ohlin Theorem 5.4b General Equilibrium Framework of the Heckscher-Ohlin Theory 5.4c Illustration of the Heckscher-Ohlin Theory Case Study 5-3: Patterns of Comparative Advantage in Leading Industrial Countries 5.5 Factor-Price Equalization and Income Distribution 5.5a The Factor-Price Equalization Theorem 5.5b Relative and Absolute Factor-Price Equalization 5.5c Effect of Trade on the Distribution of Income 5.5d Empirical Relevance Case Study 5-4: Convergence of Real Wages Among Industrial Countries 5.6 Empirical Tests of the Heckscher-Ohlin Model 5.6a Empirical Results-The Leontief Paradox 5.6b Explanations of the Leontief Paradox 5.6c Factor-Intensity Reversal Case Study 5-5: Capital and Labor Requirements in U.S. Trade Summary A Look Ahead Key Terms Questions for Review Problems Appendix: A5.1 The Edgeworth Box Diagram for Nation 1 and Nation 2 A5.2 Relative Factor-Price Equalization A5.3 Absolute Factor-Price Equalization A5.4 Effect of Trade on the Short-Run Distribution of Income: The Specific-Factors Model A5.5 Illustration of Factor-Intensity Reversal A5.6 The Elasticity of Substitution and Factor-Intensity Reversal A5.7 Empirical Tests of Factor-Intensity Reversal Selected Bibliography CHAPTER 6 Economies of Scale, Imperfect Competition, and Intemational Trade 6.1 Introduction 6.2 The Heckscher-Ohlin Model and New Trade Theories 6.3 Economies of Scale and International Trade 6.4 Imperfect Competition and International Trade 6.4a Trade Based on Product Differentiation Case Study 6-1: U.S. Intra-Industry Trade in Automotive Products 6.4b Measuring Intra-Industry Trade 6.4c Formal Model of Intra-Industry Trade Case Study 6-2: Intra-Industry Trade of Leading Industrial Countries 6.5 Trade Based on Dynamic Technological Differences and Synthesis of Trade Theories 6.5a The Technological Gap and Product Cycle Models 6.5b Illustration of the Product Cycle Model 6.5c Synthesis of Trade Theories 6.6 Transportation Costs, Environmental Standards, and International Trade 6.6a Transportation Costs and Nontraded Commodities 6.6b Transportation Costs and the Location of Industry Case Study 6-3: The Maquiladoras: U.S. Plants Along the U.S.-Mexican Border 6.6c Environmental Standards, Industry Location, and Intemational Trade Summary A Look Ahead Key Terms Questions for Review Problems Appehdix: A6.1 External Economies and the Pattern of Trade A6.2 Dynamic External Economies. and Specialization Selected Bibliography CHAPTER 7 Economic Growth and International Trade 7.1 Introduction 7.2 Growth of Factors of Production 7.2a Labor Growth and Capital Accumulation Over Time 7.2b The Rybczynski Theorem 7.3 Technical Progress 7.3a Neutral, Labor-Saving, and Capital-Saving Technical Progress 7.3b Technical Proeress and the Nation's Production Frontier Case Study 7-1: Changes in Relative Resource Endowments of Leading Industrial Countries Case Study 7-2: Factor Growth and Changes in Comparative Advantage Case Study 7-3: Changes in Capital-Labor Ratios of Selected Countries 7.4 Growth and Trade: The Small Country Case 7.4a The Effect of Growth on Trade 7.4b Illustration of Factor Growth, Trade, and Welfare 7.4c Technical Progress, Trade, and Welfare 7.5 Growth and Trade: The Large Country Case 7.5a Growth and the Nation's Terms of Trade and Welfare 7.5b Immiserizing Growth 7.5c Illustration of Beneficial Growth and Trade 7.6 Growth, Change in Tastes, and Trade in Both Nations 7.6a Growth and Trade in Both Nations 7.6b Change in Tastes and Trade in Both Nations Case Study 7-4: Changes in the Pattern of Comparative Advantage in the Leading Industrial Countries Summary ?A Look Ahead ?Key Terms ?Questions for Review ?Problems 209 Appendix: A7.1 Formal Proof of the Rybczynski Theorem A7.2 Growth with Factor Immobility A7.3 Graphical Analysis of Hicksian Technical Progress Selected Bibliography PART TWO INTERNATIONAL TRADE POLICY CHAPTER 8 Trade Restrictions: Tariffs 8.1 Introduction 8.2 Partial Equilibrium Analysis of a Tariff Case Study 8-1: Average Tariffs for Major Developed Countries and Products 8.2a Partial Equilibrium Effeets of a Tariff 8.2b Effect of a Tariff on Consumer and Producer Surplus 8.2c Costs and Benefits of a Tariff Case Study 8-2: The Welfare Effects of Tariffs on Some U.S. Products 8.3 The Theory of Tariff Structure 8.3a The Rate of Effective Protection 8.3b Generalization and Evaluation of the Theory of Effective Protection Case Study 8-3: Rising Tariff Rates with Degree of Domestic Processing Case Study 8-4: Nominal and Effective Tariff Rates in the United States, the EU, and Japan 8.4 General Equilibrium Analysis of a Tariff in a Small Country 8.4a General Equilibrium Effects of a Tariff in a Small Country 8.4b Illustration of the Effects of a Tariff in a Small Country 8.4c The Stolper-Samuelson Theorem 8.5 General Equilibrium Analysis of a Tariff in a Large Country 8.5a General Equilibrium Effects of a Tariff in a Large Country 8.8b Illustration of the Effects of a Tariff in a Large Country 8.6 The Optimum Tariff 8.6a The Meaning of the Concept of Optimum Tariff and Retaliation 8.6b Illustration of the Optimum Tariff and Retaliation Summary A Look Ahead Key Terms Questions for Review Problems Appendix: A8.1 Partial Equilibrium Effects of a Tariff in a Large Nation A8.2 Derivation of the Formula for the Rate of Effective Protection A8.3 The Stolper-Samuelson Theorem Graphically A8.4 Exception to the Stolper-Samuelson Theorem- The Metzler Paradox A8.5 Short-Run Effect of a Tariff on Factors' Income A8.6 Measurement of the Optimum Tariff Selected Bibliography CHAPTER 9 Nontariff Trade Barriers and the New Protectionism 9.1 Introduction 9.2 Import Quotas 9.2a The Effects of an Import Quota 9.2b Comparison of an Import Quota to an Import Tariff 9.3 Other Nontariff Barriers and the New Protectionism 9.3a Voluntary Export Restraints 9.3b Technical, Administrative, and Other Regulations Case Study 9-1: Voluntary Export Restraint Arrangements Case Study 9-2: Voluntary Export Restraints on Japanese Automobiles to the United States 9.3c International Cartels 9.3d Dumping 9.3e Export Subsidies Case Study 9-3: Agricultural Subsidies in Industrial Countries Case Study 9-4: Administered Protection in the United States and Other Countries 9.4 The Political Economy of Protectlonism and Strategic Trade and Industrial Policy 9.4a Fallacious and Questionable Arguments for Protection Case Study 9-5: Nontariff Trade Barriers in the U.S., the EU, and Japan 9.4b The Infant-Industry and Other Qualified Arguments for Protection 9.4c Strategic Trade Policy 9.4d The U.S. Response to Foreign Industrial Targeting and Strategic Trade Policy 9.4e Who Gets Protected? 9.5 History of U.S. Commercial Policy 9.5a The Trade Agreements Act of 1934 Case Study 9-6: Welfare Effects of Removing U.S. Trade Restrictions 9.5b The General Agreement on Tariff and Trade (GATT) 9.5c The 1962 Trade Expansion Act and the Kennedy Round 9.5d The Trade Reform Act of 1974 and the Tokyo Round 9.5e The 1984 and 1988 Trade Acts 9.6 The Umguay Round and Outstanding Trade Problems 9.6a The Uruguay Round Q.6b Outstanding Trade Problems Summary A Look Ahead Key Terms Questions for Review Problems Appendix: A9.1 Centralized Cartels A9.2 International Price Discrimination A9.3 Taxes or Subsidies to Correct Domestic Distortions A9.4 Strategic Trade and Industrial Policy with Game Theory Selected Bibliography CHAPTER 10 Economic Integration: Customs Unions and Free Trade Areas 10.1 Introduction 10.2 Trade-Creating Customs Unions 10.2a Trade Creation 10.2b Illustration of a Trade-Creating Customs Union 10.3 Trade-Diverting Customs Unions 10.3a Trade Diversion lO.3b Illustration of a Trade-Diverting Customs Union 10.4 The Theory of the Second Best and Other Static Welfare Effects of Customs Unions 10.4a The Theory of the Second Best 10.4b Conditions More Likely to Lead to Increased Welfare 10.4c Other Static Welfare Effects of Customs Unions 10.5 Dynamic Benefits from Customs Unions 10.6 History of Attempts at Economic Integration lO.6a The Economic Union Case Study 10-1: Economic Profiles of the EU, NAFTA, Lnd Japan Case Study 10-2: Gains from the Single EU Market in 1992 10.6b The European Free Trade Association 10.6c U.S. Free Trade Agreements and the North American Free Trade Agreement 10.6d Attempts at Economic Integration Among Developing Countries 10.6e Economic Integration in Eastern Europe and in the Former Soviet Republics Summary A Look Ahead KeyTerms Questions for Review Problems Appendix: AlO.l General Equilibrium Analysis of the Static Effects of a Trade-Diverting Customs Union A1.02 Membership of Selected Regional Trade Arrangements and Recent Initiatives Selected Bibliography CHAPTER 11 Intemational Trade and Economic Development 11.1 Introduction 11.2 The Importance of Trade to Development 11.2a Trade Theory and Economic Development ll.2b Trade as an Engine of Growth 11.2c The Contributions of Trade to Development 11.2d International Trade and New Theories of Endogenous Growth 11.3 The Terms of Trade and Economic Development ll.3a The Various Terms of Trade ll.3b Alleged Reasons for Deterioration in the Commodity Terms of Trade ll.3c Historical Movement in the Commodity and Income Terms of Trade 11.4 Export Instability and Economic Development 11.4a Cause and Effects of Export Instability llAb Measurements of Export Instability and Its Effect on Development 11.4c Ihtemational Commodity Agreements 11.5 Import Substitution Versus Export Orientatior 11.5a Development Through Import Substitution Versus Exports 11.5b The Experience with Import Substitution Case Study 11-1: Economic Performance of Developing Countries According to Their Trade Orientation 11.5c Recent Trade Liberalization and Growth in Developing Countries 11.6 Current Problems and Demands ofDeveloping Countries 11.6a Poverty in Developing Countries 11.6b The International Debt Problem of Developing Countries Case Study 11-2: The International Debt Burden of Developing Countries 11.6c Trade Problems of Developing Countries 11. Gd Demands for a New International Economic Order Case Study 11-3: Foreign Aid Flows to Developing Countries Summary A Look Ahead Key Terms Questions for Review Problems Appendix: All.l Income Inequalities by Traditional and Purchasing- Power Parity (PPP) Measures Selected Bibliography CHAPTER 12 International Resource Movements and Multinational Corporations 12.1 Introduction 12.2 Some Data on International Capital Flows 12.3 Motives for International Capital Flows 12.3a Motives for International Portfolio Investments 12.3b Motives for Direct Foreign Investments Case Study 12-1: The Rise and Fall of Foreign Direct Investment Flows to the United States 12.4 Welfare Effects of Intemational Capital Flows 12.4a Effects on the Investing and Host Countries 12.4b Other Effects on the Investing and Host Countries 12.5 Multinational Corporations 12.5a Reasons for the Existence 01 Multinational Corporations 12.5b Problems Created by Multinational Corporations in the Home Country Case Study 12-2: The World's Largest Multinational Corporations 12.5c Problems Created by Multinational Corporations in the Host Country 12.6 Motives for and Welfare Effects of International Labor Migration 12.6a Motives for Intemational Labor Migration 12.6b Welfare Effects of International Labor Migration 12.6c Other Welfare Effects of International Labor Migration Case Study 12-3: British and Russian Brain Drain Is U.S. Brain Gain Summary A Look Ahead Key Terms Questions for Review Problems Appendix: A12.l The Transfer Problem Selected Bibliography PART III FOREIGN EXCHANGE MARKETS, EXCHANGE RATES, AND THE BALANCE OF PAYMENTS CHAPTER 13 Foreign Exchange Markets and Exchange Rates 13.1 Introduction 13.2 Functions of the Foreign Exchange Markets Case Study 13-1: The Foreign Exchange Market 13.3 Foreign Exchange Rates 13.3a Equilibrium Foreign Exchange Rates Case Study 13-2: Foreign Exchange Quotations 13.3b Arbitrage 13.3c Spot and Forward Rates 13.3(1 Currency Swaps 13.3e Foreign Exchange Futures and Options Case Study 13-3: Quotations on Foreign Currency Futures and Options 13.4 Foreign Exchange Risks, Hedging, and Speculation 13.4a Foreign Exchange Risks I3.4b Hedging 13.4c Speculation 13.5 Interest Arbitrage and the Efficiency of Foreign Exchange Markets 13.5a Uncovered Interest Arbitrage 13.5b Covered Interest Arbitrage 13.5c The Efficiency of Foreign Exchange Markets 13.6 Introduction to Exchange Rate Theories 13.6a Trade or Elasticities Approach to Exchange Rate Determination I3.6b Purchasing-Power Parity Theory of Exchange Rate Determination I3.6c Monetary Approach to Exchange Rate Determination and Overshooting 13.6d Portfolio-Balance Approach to Exchange Rate Determination Summary A Look Ahead Key Tenns Questions for Review Problems Appendix: Al3.1 Description of the Eurocurrency Markets A13.2 Operation and Effects of Eurocurrency Markets Al3.3 Eurobond and Euronote Markets Al3.4 Covered Interest Arbitrage and Interest Parity Theory A13.5 Derivation of the Formula for the Covered Interest Arbitrage Margin Selected Bibliography *CHAPTER 14 Balance of Payments 14.1 Introduction 14.2 Balance-of-Payments Accounting Principles 14.2a Debits and Credits 14.2b Double-Entry Bookkeeping 14.3 The International Transactions of the United States 14.4 Accounting Balances and Disequilibrium in International Transactions 14.4a Aceounting Balances 14.4b Disequilibrium in International Transactions 14.5 Brief Postwar International Monetary History of the United States Case Study 14-1: The Major Commodity Exports and Imports of the United States Case Study 14-2: The Major Trade Partners of the United States 14.6 The International Investment Position of the United States Case Study 14-3: The United States as a Debtor Nation Summary A Look Ahead Key Terms Questions for Review Problems Appendix: Al4.1 The IMF Method of Reporting International Transactions A14.2 The Case of the Missing Surplus Selected Bibliography PARTIV OPEN-ECONOMY MACROECONOMICS: ADJUSTMENT IN THE BALANCE OF PAYMENTS AND DOMESTIC STABILITY CHAPTER 15 The Price Adjustment Mechanism Under a Flexible and a Fixed Exchanse Rate System 15.1 Introduction 15.2 Adjustment with Flexible Exchange Rates 15.2a Balance-of-Payments Adjustments with Exchange Rate Changes 15.2b Derivation of the Demand Curve for Foreign Exchange 15.2c Derivation of the Supply Curve for Foreign Exchange 15.2d Effect of Exchange Rate Changes on Domestic Prices and the Terms of Trade 15.3 Stability of Foreign Exchange Markets 15.3a Stable and Unstable Foreign Exchange Markets 15.3b The Marshall-Lerner Condition 15.4 Elasticities in the Real World 15.4a Elasticity Estimates 15.4b The J-Curve Case Study 15-1: Estimated Price Elasticities in International Trade Case Study 15-2: The Effective Exchange Rate of the Dollar and the LJ.S. Current Account Balance 15.5 Purchasing-Power Parity 15.5a Absolute Purchasing-Power Parity Theory 15.5b Relative Purchasing-Power Parity Theory Case Study 15-3: Big MacCurrencies Case Study 15-4: Empirical Test of the Purchasing-Power Parity Theory 15.6 Adjustment Under the Gold Standard 15.6a The Gold Standard 15.6b The Price-Specie-Flow Mechanism Summary A Look Ahead Key Terms Questions for Review Problems Appendix: Al5.1 The Effect of Exchange Rate Changes on Domestic Prices A15.2 Derivation of the Marshall-Lerner Condition 507 A15.3 Stability of Foreign Exchange Markets Once Again A15.4 Derivation of the Gold Points and Gold Flows Under the Gold Standard Selected Bibliography CHAPTER 16 The Income Adjustment Mechanism and Synthesis of Automatic Adjustments 16.1 Introduction 16.2 Income Determination in a Closed Economy 16.2a Determination of the Equilibrium National Income in a Closed Economy 16.2b The Multiplier in a Closed Economy 16.3 Incpme Determination in a Small Open Economy 16.3a The Import Function 16.3b Determmation of the Equilibrium National Income in a Small Open Economy Case Study 16-1: The Income Elasticity of Imports 16.3c Graphical Determination of the Equilibrium National Income 16.3d The Foreign Trade Multiplier 16.4 Foreign Repercussions 16.5 The Absorption Approach 16.6 Monetary Adjustments and Synthesis of the Automatic Adjustments 16.6a Monetary Adjustments 16.6b Synthesis of Automatic Adjustments Case Study 16-2: Interdependence in the World Economy 16.6c Disadvantages of Automatic Adjustments Summary A Look Ahead Key Terms Questions for Review Problems Appendix: A16.l Derivation of Foreign Trade Multipliers with Foreign Repercussions A16.2 The Transfer Problem Once Again Selected Bibliography CHAPTER 17 Open-Economy Macroeconomics: Adjustment Policies 17.1 Introduction 17.2 Internal and External Balance with Expenditure-Changing and Expenditure-Switching Policies 17.3 Equilibrium in the Goods Market, in the Money Market, and in the Balance of Payments 17.4 Fiscal and Monetary Policies for Internal and External Balance with Fixed Exchange Rates 17.4a Fiscal and Monetary Policies from External Balance and Unemployment 17.4b Fiscal and Monetary Policies from External Deficit and Unemployment 17.4c Fiscal and Monetary Policies with Elastic Capital Flows Case Study 17-1: Relationship Between U.S. Current Account and Budget Deficits 17.5 The Policy Mix and Price Changes 17.5a The Policy Mix and Internal and External Balance 17.5b Evaluation of the Policy Mix with Price Changes 17.5c Policy Mix in the Real World Case Study 17-2: U.S. Monetary and Fiscal Policies in the 1980s and Early I990s 17.6 Direct Controls 17.6a Trade Controls 17.6b Exchange Controls 17.6c Other Direct Controls and International Cooperation Case Study 17-3: Direct Controls on International Transactions Around the World Sununary A Look Ahead Key Terms Questions for Review Problems Appendix: A17.l Derivation of the IS Curve A17.2 Derivation of the LM Curve A17.3 Derivation of the FE Curve A17.4 The IS-LM-FE Model with Exchange Rate Changes A17.5 Mathematical Summary Selected Bibliography CHAPTER 18 Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply 18.1 Introduction 18.2 Aggregate Demand, Aggregate Supply, and Equilibnum in a Closed Economy 18.2a Aggregate Demand in a Closed Economy 18.2b Aggregate Supply in the Long Run and in tne snort Run 18.2c Short-Run and Long-Run Equilibrium in a Closed Economy Case Study 18-1: Deviations of Short-Run Outputs from the Natural Level in the United States 18.3 Aggregate Demand in an Open Economy Under Fixed and Flexible Exchange Rates 18.3a Aggregate Demand in an Open Economy Under Fixed Exchange Rates 18.3b Aggregate Demand in an Open Economy Under Flexible Exchange Rates 18.4 Effect of Economic Shocks and Macroeconomic Policies on Aggregate Demand in Open Economies with Flexible Prices 18.4a Real-Sector Shocks and Aggregate Demand 18.4b Monetary Shocks and Aggregate Demand 18.4c Fiscal and Monetary Policies and Aggregate Demand in Open Economies 18.5 Effect of Fiscal and Monetary Policies in Open Economies with Flexible Prices Case Study 18-2: Central Bank Independence and Inflation in Industrial Countries 18.6 Macroeconomic Policies to Stimulate Growth and Adjust to Supply Shocks 18.6a Macroeconomic Policies for Growth 18.6b Macroeconomic Policies to Adjust to Supply Shocks Cose Study 18-3: Petroleum Shocks and Stagflation in the United States Summary A Look Ahead Key Terms Questions for Review Problems Selected Bibliography CHAPTER 19 TAe Monetary and Portfolio Balance Approaches 19.1 Introduction 19.2 The Monetary Approach Under Fixed Exchange Rates 19.2a Causes and Adjustment of External Imbalances 19.2b Further Aspects of the Adjustment Process 19.2c Control Over the Nation's Money Supply 19.3 Policy Implications of the Monetary Approach Under Fixed Exchange Rates and Inflation in the World Economy 19.3a Policy Implications of the Monetary Approach Under Fixed Exchange Rates 19.3b The Monetary Approach and Inflation in the World Economy Under Fixed Exchange Rates 19.4 The Monetary Approach Under Flexible Exchange Rates 19.5 The Portfolio Balance Approach and Exchange Rate Dynamics 19.5a The Portfolib Balance Approach I9.5b Exchange Rate Dynamics Case Study 19-1: Exchange Rate Uvershooting of the U.S. Dollar 19.6 Evaluation and Empirical Tests of the Monetary and Portfolio Balance Approaches Case Study 19-2: Monetary Growth and Inflation and the Monetary Approach Case Study 19-3: Nominal and Real Exchange Rates and the Monetary Approach Case Study 19-4: Interest Differentials, Exchange Rates, and the Monetary Approach Summary A Look Ahead Key Terms Questions for Review Problems 641 Appendix: A19.1 A Mathematical Model of the Monetary Approach A19.2 The Exchange Rate Under the Monetary Approach A19.3 A Mathematical Model of the Portfolio Balance Approach Selected Bibliography CHAPTER 20 Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination 20.1 Introduction 20.2 The Case for Flexible Exchange Rates 20.2a Market Efficiency 20.2b Policy Advantages 20.3 The Case for Fixed Exchange Rates 20.3a Less Uncertainty 20.3b Stabilizing Speculation 20.3c Price Discipline Case Study 20-1: Macroeconomic Performance Under Fixed and Flexible Exchange Rate Regimes 20.4 Optimum Currency Areas and the European Monetary System 20.4a Optimum Currency Areas 20.4b The European Monetary System Case Study 20-2: Anatomy of a Currency Crisis: The Collapse of the EU Exchange Rate Mechanism 20.5 Exchange Rate Bands, Adjustable Pegs, Crawling Pegs, and Managed Floating 20.5a Exchange Rate Bands 20.5b Adjustable Peg Systems 20.5c Crawling Pegs 20. 5d Managed Floating Case Study 20-3: Exchange Arrangements of the IMF Members 20.6 International Macroeconomic Policy Coordination Summary A Look Ahead Key Terms Questions for Review Problems 678 Appendix: A20.1 Exchange Rate Arrangements Selected Bibliography CHAPTER 21 The International Monetary System: Past, Present, and Future 21.1 Introduction 21.2 The Gold Standard and the Interwar Experience 21.2a The Gold Standard Period (1880-1914) 21.2b The Interwar Experience 21.3 The Bretton Woods System 21.3a The Gold-Exchange Standard (1947-1971) 21.3b Borrowing from the International Monetary Fund 21.4 Operation and Evolution ofthe Bretton Woods System 21.4a Operation of the Bretton WoodS System 21.4b Evolution of the Bretton Woods System Case Study 21-1: Macroeconomic Performance Under Different Exchange Rate Regimes 21.5 U.S. Balance-of-Pavments Deficits and Collapse of the Bretton Woods System 21.5a U.S. Balance-of-Payments Deficits 21.5b Collapse of the Bretton Woods System 21.6 The International Monetary System: Present and Future 21.6a Operation of the Present System 21.6b Current IMF Operation 21.6c Problems with Present Exchange Rate Arrangements 21.6d Proposals for Reforming Present Exchange Rate Arrangements Case Study 21 -2: Exchange Rate Volatility and Misalignments Since 1967 21.6e Other Current International Economic Problems Case Study 21 -3: Trade Imbalances Among the Leading Industrial Nations Summary Key Terms Questions for Review Problems Appendix: A21.1 International Reserves. 1950--1993 Selected Bibliography Answers to Selected Problems Glossary of Key Terms Name Index Subject Index Case Studies 1-1 Even the IBM PC Isn't All-American 1-2 The Rising Importance of International Trade to the United States 2-1 Munn's Mercantilistic Views on Trade 2-2 The Petition of the Candlemakers 3-1 Comparative Advantage of the United States, the European Union, and Japan 3-2 Reallocating Labor in the United States: Comparative Advantage at Work 4-1 The Index of Export to Import Prices for the United States 4-2 The Terms of Trade of Developing and Developed Countries 5-1 Relative Resource Endowments of Leading Industrial Countries 5-2 Capital-Labor Ratios of Selected Countries 5-3 Patterns of Comparative Advantage in Leading Industrial Countries 5-4 Convergence of Real Wages Among Industrial Countries 5-5 Capital and Labor Requirements in U.S. Trade 6-1 U.S. Intra-Industry Trade in Automotive Products 6-2 Intra-Industry Trade of Leading Industrial Countries 6-3 The Maquiladoras: U.S. Plants Along the U.S.-Mexican Border 7-1 Changes in Relative Resource Endowments of Leading Industrial Countries 7-2 Factor Growth and Changes in, Comparative Advantage 7-3 Changes in Capital-Lahor Ratios of Selected Countries 7-4 Changes in the Pattern of Comparative Advantage in the Leading Industrial Countries 8-1 Average Tariffs for Major Developed Countries and Products 8-2 The Wel'fare Effects of Tariffs on Some U.S. Products 8-3 Rising Tariff Rates with Degree of Domestic Processing 8-4 Nominal and Effective Tariff Rates in the United States, the EU, and Japan 9-1 Voluntary Export Restraint Arrangements 9-2 Voluntary Export Restraints on Japanese Automobiles to the United States 9-3 Agricultural Subsidies in Industrial Countries 9-4 Administered Protection in the United States and Other Countries 9-5 Nontariff Trade Barriers in the United States, the EU, and Japan 9-6 Welfare Effects of Removing U.S. Trade Restrictions 10-1 Economic Profiles of the