Applied International Economics

Cover
Half Title
Title Page
Copyright Page
CONTENTS
List of figures
List of tables
List of boxes
Preface
Acknowledgments
CHAPTER 1 Introduction: an overview of the world economy
	Introduction
	The scope of international economics
	The output of the world economy
	Imports and exports of goods in the world economy
	International trade in services
	Capital flows in the world economy
	Trends in international production and trade
	Globalization
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 2 Why countries trade
	Introduction
	International trade versus interregional trade
	Trade in an individual product
	Trade based on absolute advantage
		Absolute advantage
		The gains from specialization and trade with absolute advantage
	Trade based on comparative advantage
		Comparative advantage
		The gains from specialization and trade with comparative advantage
	Trade based on opportunity costs
		Opportunity costs
		The gains from specialization and trade with opportunity costs
	Dynamic gains from trade
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 3 Comparative advantage and the production possibilities frontier
	Introduction
	The production possibilities frontier and constant costs
		The production possibilities frontier
		Production and consumption without specialization and trade
		Production and consumption with specialization and trade
	The terms of trade
		Changes in the gains from specialization and trade
		Demand conditions and the terms of trade
		Distribution of the gains from trade
	Trade under increasing opportunity costs
		Increasing costs and the production possibilities frontier
		Production and consumption without specialization and trade
		Production and consumption with specialization and trade
	International trade under increasing costs: an advanced analysis
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 4 Factor endowments and the commodity composition of trade
	Introduction
	The factor-proportions theory
		Assumptions of the factor-proportions theory
		The factor-proportions theory
	Factor-price equalization and the distribution of income
		Factor-price equalization
		Trade and the distribution of income
		Trade and income inequality
	The specific-factors model
	Empirical evidence concerning the factor-proportions theory
		The Leontief paradox
		Explanations of the Leontief paradox
	International trade not explained by the factor-proportions theory
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
	Appendix 4.1: Factor-proportions theory: an advanced analysi
CHAPTER 5 Intra-industry trade
	Introduction
	Defining intra-industry trade
	The increasing importance of intra-industry trade
	Intra-industry trade in homogeneous products
	Intra-industry trade in differentiated products
		Economies of scale
		The product cycle
		Overlapping demands
	Empirical evidence on intra-industry trade
	The welfare implications of intra-industry trade
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 6 THE FIRM IN THE WORLD ECONOMY
	Introduction
	The firm in international trade
		Firm heterogeneity
	The multinational corporation
		The importance of MNCs
		Reasons for the existence of MNCs
	Offshoring and MNCs
	Global value chains
	Public policy toward MNCs
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 7 International factor movements
	Introduction
	International trade versus international factor movements
	International movements of capital
		Reasons for the international movement of capital
		Welfare effects of international capital movements
		Capital movements and public policy
	International movements of labor
		Reasons for the international movement of labor
		Welfare effects of the international movement of labor
		Immigration and public policy
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 8 Tariffs
	Introduction
	Tariffs: some preliminary details
		Types of tariffs
		Methods of valuing imports
	Welfare effects of trade in an individual product
		Consumer and producer surplus: a review
		The effects of free trade
	The economic effects of tariffs
		The effects of a tariff for a small country
		The effects of a tariff for a large country
	The effective rate of protection
	Arguments for tariffs
		Infant government
		National defense
		Infant industries
		Senile industry protection
		Tariffs, trade, and jobs
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 9 Nontariff distortions to trade
	Introduction
	Nontariff barriers to trade
	Quotas
	The economic effects of a quota
	Other nontariff distortions
		Industrial policy
		Technical barriers to trade
		Subsidies
		Government procurement
	Corruption and international trade
	Economic sanctions
	Labor and environmental standards
	Transportation costs and trade
	The gravity equation and international trade
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 10 International trade policy
	Introduction
	The political economy of protectionism
		Protectionism and public choice
		The structure of protection
	The evolution of U.S. trade policy
	The formulation of U.S. trade policy
	Antidumping, countervailing duties, and safeguards
		Antidumping
		Types of dumping
		History of antidumping law in the United States
		Countervailing duties
		Safeguards
	The General Agreement on Tariffs and Trade (GATT)
	GATT and multilateral trade negotiations
	The World Trade Organization (WTO)
	The future of international trade negotiations
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
	Appendix 10.1: Price discrimination
CHAPTER 11 Regional economic arrangements
	Introduction
	Degrees of economic integration
	Rules of origin in international trade
	Trade effects of economic integration
	The static effects of a customs union
	The European Union
	NAFTA and other U.S. trade agreements
		NAFTA
		Other U.S. trade agreements
	Multilateralism versus regional trade agreements
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 12 International trade and economic growth
	Introduction
	The developing countries
		Economic development
		GDP of developing countries
	Economic growth
		Preconditions for growth
		Economic growth and the factors of production
		Basic growth theory
		Changes in capital stock and technology
	International trade and economic growth
		Openness and growth
		Capital flows, technology transfers, and economic growth
	Economic development strategies
		Primary products
		Import substitution
		Export promotion
	Official development assistance
		The role of official development assistance
		Flows of official development assistance
	Multilateral development organizations
		The World Bank and regional development banks
		The United Nations agencies
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 13 National income accounting and the balance of payments 284
	Introduction
	National income accounting
		The measurement of GDP
		Items excluded from GDP
		GDP and changes in prices
		The components of GDP
	GDP and the trade balance
		GDP in a closed economy
		GDP in an open economy
		Imports, exports, and GDP
		Intertemporal trade
		Saving, investment, the government budget, and the trade balance
		Adjustments to trade imbalances
	The balance of payments accounts
		The balance on current account
		The balance on capital and financial accounts
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 14 Exchange rates and their determination: a basic model
	Introduction
	Exchange rates
	The demand for foreign exchange
	Shifts in the demand for foreign exchange
		Changes in domestic income
		Changes in relative prices
	The supply of foreign exchange
	Shifts in the supply of foreign exchange
		Changes in foreign income
		Changes in relative prices
	Equilibrium in the foreign exchange market
	Changes in the equilibrium exchange rate
	Exchange rate volatility and international trade
	Exchange rate pass through
	Price levels and the exchange rate in the long run
	The law of one price
	Purchasing power parity
		Absolute purchasing power parity
		Relative purchasing power parity
		Purchasing power parity in the short run and the long run
	The real exchange rate
		Changes in the real exchange rate
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 15 Money, interest rates, and the exchange rate
	Introduction
	Money defined: a review
	The supply of money
	The demand for money
	The equilibrium interest rate: the interaction of money supply and demand
	The interest rate and the exchange rate in the short run
	Interest rates, the exchange rate, and the balance of payments
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
	Appendix 15.1: The relationship between the monetary base and the money supply
	Appendix 15.2: Interest parity and covered interest arbitrage
CHAPTER 16 Open economy macroeconomics
	Introduction
	Aggregate demand and aggregate supply: a review
		Aggregate demand
		Changes in aggregate demand
	Aggregate supply
		Changes in aggregate supply
		Aggregate equilibrium
	Determinants of the current account
		Exports
		Imports
	Exchange rate changes and equilibrium output in an open economy
		Exchange rate appreciation
		Exchange rate depreciation
	Exchange rate shocks
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 17 Macroeconomic policy and floating exchange rates
	Introduction
	Fiscal and monetary policy
	Changes in fiscal policy
		Expansionary fiscal policy
		Contractionary fiscal policy
	Changes in monetary policy
		Expansionary monetary policy
		Contractionary monetary policy
	Monetary and fiscal policy in an open economy
	Consistent policy mixes
		Inconsistent policy mixes
	Trade flow adjustment and current account dynamics
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 18 Fixed exchange rates and currency unions
	Introduction
	Inconvertible currencies
		Difficulties associated with exchange controls
	Intervention in the foreign exchange market
		Macroeconomic adjustment under fixed exchange rates: Part I
		Macroeconomic adjustment under fixed exchange rates: Part II
		Fiscal policy and internal balance
		The effects of expansionary and contractionary fiscal policy
		Sterilization
		Pegging the exchange rate with monetary policy
	Currency unions
	The trilemma
	The European Monetary Union
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 19 International monetary arrangements
	Introduction
	The gold standard
		The gold standard and monetary policy
		The macroeconomics of the gold standard
	Costs and benefits of the gold standard
	The Bretton Woods system and the International Monetary Fund
		The Bretton Woods System
		The International Monetary Fund
		The demise of the Bretton Woods System
	The post-Bretton Woods era
	Clean floats
		Fixing the exchange rate
	Options for international monetary reform
	Summary
	Key concepts and terms
	Problems and questions for review
	Notes
	References
CHAPTER 20 Capital flows and the developing countries
	Introduction
	Capital flows to developing countries
		Debt versus equity
		Servicing foreign debt
	Exchange rate shocks
		Macroeconomic consequences of exchange rate shocks
		Sources of exchange rate shocks
	Commodity price shocks
	Exchange controls
	Intervention, capital flights, and defaults
	The IMF and developing countries
		IMF conditionality
		The future of the IMF
	Summary
	Key concepts and terms
	Problems and questions for review
	Note
	References
Appendix: GDP, population, and exports for U.S. regions and states, 2018
Glossary
Index