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International Economics Theory and Policy 11th Edition by Paul R Krugman

International Economics: Theory and Policy, 11th Edition by Paul R. Krugman provides a comprehensive overview of international economics, covering key concepts in trade and finance. The text is designed for courses in international economics and includes practical applications of theory, along with access to MyLab Economics for enhanced learning. This edition continues to set the standard in the field with contributions from notable economists and offers various formats including PDF eBook and study guides.

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0% found this document useful (0 votes)
327 views319 pages

International Economics Theory and Policy 11th Edition by Paul R Krugman

International Economics: Theory and Policy, 11th Edition by Paul R. Krugman provides a comprehensive overview of international economics, covering key concepts in trade and finance. The text is designed for courses in international economics and includes practical applications of theory, along with access to MyLab Economics for enhanced learning. This edition continues to set the standard in the field with contributions from notable economists and offers various formats including PDF eBook and study guides.

Uploaded by

joseph.hkarira
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International Economics Theory and Policy 11th Edition by Paul R


Krugman\nInternational Economics Theory and Policy 11th Edition by Paul R
Krugman\nFor courses in International Economics, International Finance, and
International Trade. A balanced approach to theory and policy applications
International Economics: Theory and Policy provides engaging, balanced coverage of
the key concepts and practical applications of the two main topic areas of the
discipline. For both international trade and international finance, an intuitive
introduction to theory is followed by detailed coverage of policy applications. With
this new 11th Edition, the author team of Nobel Prize-winning economist Paul Krugman,
renowned researcher Maurice Obstfeld, and Marc Melitz of Harvard University
continues to set the standard for International Economics coverage. Also available
with MyLab Economics MyLabâ■¢ Economics is an online homework, tutorial, and
assessment program designed to work with this text to engage students and improve
results. Within its structured environment, students practice what they learn, test
their understanding, and pursue a personalized study plan that helps them better
absorb course material and understand difficult concepts. Note: You are purchasing a
standalone product; MyLab Economics does not come packaged with this content.
Students, if interested in purchasing this title with MyLab Economics, ask your
instructor for the correct package ISBN and Course ID. Instructors, contact your
Pearson representative for more information. If you would like to purchase both the
physical text and MyLab Economics, search for: 0134641787 / 9780134641782
International Economics: Theory and Policy Plus MyLab Economics with Pearson eText
â■■ Access Card Package, 11/e Package consists of: 0134519574 / 9780134519579
International Economics: Theory and Policy 0134542630 / 9780134542638 MyLab Economics
with Pearson eText â■■ Standalone Access Card â■■ for International Economics:
Theory and Policy\nInternational Economics THEORY & POLICY\nBrief
Contents\nContents\nPreface\nRevelâ■¢\nNew to the Eleventh Edition\nAbout the
Book\nThe Place of This Book in the Economics Curriculum\nSome Distinctive
Features\nLearning Features\nCHAPTER 1 Introduction\nLEARNING GOALS\nWhat Is
International Economics About?\nThe Gains from Trade\nThe Pattern of Trade\nHow Much
Trade?\nBalance of Payments\nExchange Rate Determination\nInternational Policy
Coordination\nThe International Capital Market\nInternational Economics: Trade and
Money\nPART ONE International Trade Theory\nCHAPTER 2 World Trade: An
Overview\nLEARNING GOALS\nWho Trades with Whom?\nSize Matters: The Gravity
Model\nUsing the Gravity Model: Looking for Anomalies\nImpediments to Trade:
Distance, Barriers, and Borders\nThe Changing Pattern of World Trade\nHas the World
Gotten Smaller?\nWhat Do We Trade?\nService Offshoring\nDo Old Rules Still
Apply?\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER READINGS\nCHAPTER 3 Labor Productivity
and Comparative Advantage: The Ricardian Model\nLEARNING GOALS\nThe Concept of
Comparative Advantage\nA One-Factor Economy\nRelative Prices and Supply\nTrade in a
One-Factor World\nDetermining the Relative Price after Trade\nThe Gains from Trade\nA
Note on Relative Wages\nMisconceptions about Comparative Advantage\nProductivity and
Competitiveness\nThe Pauper Labor Argument\nExploitation\nComparative Advantage with
Many Goods\nSetting Up the Model\nRelative Wages and Specialization\nDetermining the
Relative Wage in the Multigood Model\nAdding Transport Costs and Nontraded
Goods\nEmpirical Evidence on the Ricardian Model\nSUMMARY\nKEY
TERMS\nPROBLEMS\nFURTHER READINGS\nCHAPTER 4 Specific Factors and Income
Distribution\nLEARNING GOALS\nThe Specific Factors Model\nAssumptions of the
Model\nProduction Possibilities\nPrices, Wages, and Labor Allocation\nAn Equal-
Proportional Change in Prices\nA Change in Relative Prices\nRelative Prices and the
Distribution of Income\nInternational Trade in the Specific Factors Model\nIncome
Distribution and the Gains from Trade\nThe Political Economy of Trade: A Preliminary
View\nIncome Distribution and Trade Politics\nManufacturing Employment and Chinese
Import Competition\nInternational Labor Mobility\nSUMMARY\nKEY
TERMS\nPROBLEMS\nFURTHER READINGS\nAPPENDIX TO CHAPTER 4\nFurther Details on Specific
Factors\nMarginal and Total Product\nRelative Prices and the Distribution of
Income\nCHAPTER 5 Resources and Trade: The Heckscher-Ohlin Model\nLEARNING
GOALS\nModel of a Two-Factor Economy\nPrices and Production\nChoosing the Mix of
Inputs\nFactor Prices and Goods Prices\nResources and Output\nEffects of
International Trade between Two-Factor Economies\nRelative Prices and the Pattern of
Trade\nTrade and the Distribution of Income\nSkill-Biased Technological Change and
Income Inequality\nFactor-Price Equalization\nEmpirical Evidence on the Heckscher-
Ohlin Model\nTrade in Goods as a Substitute for Trade in Factors: Factor Content of
Trade\nTests on U.S. Data\nTests on Global Data\nThe Case of the Missing Trade\nA
Better Empirical Fit for the Factor Content of Trade\nPatterns of Exports between
Developed and Developing Countries\nImplications of the Tests\nSUMMARY\nKEY
TERMS\nPROBLEMS\nFURTHER READINGS\nAPPENDIX TO CHAPTER 5\nFactor Prices, Goods
Prices, and Production Decisions\nChoice of Technique\nGoods Prices and Factor
Prices\nMore on Resources and Output\nCHAPTER 6 The Standard Trade Model\nLEARNING
GOALS\nA Standard Model of a Trading Economy\nProduction Possibilities and Relative
Supply\nRelative Prices and Demand\nThe Welfare Effect of Changes in the Terms of
Trade\nDetermining Relative Prices\nEconomic Growth: A Shift of the RS Curve\nGrowth
and the Production Possibility Frontier\nWorld Relative Supply and the Terms of
Trade\nInternational Effects of Growth\nTariffs and Export Subsidies: Simultaneous
Shifts in RS and RD\nRelative Demand and Supply Effects of a Tariff\nEffects of an
Export Subsidy\nImplications of Terms of Trade Effects: Who Gains and Who
Loses?\nInternational Borrowing and Lending\nIntertemporal Production Possibilities
and Trade\nThe Real Interest Rate\nIntertemporal Comparative Advantage\nSUMMARY\nKEY
TERMS\nPROBLEMS\nFURTHER READINGS\nAPPENDIX TO CHAPTER 6\nMore on Intertemporal
Trade\nCHAPTER 7 External Economies of Scale and the International Location of
Production\nLEARNING GOALS\nEconomies of Scale and International Trade: An
Overview\nEconomies of Scale and Market Structure\nThe Theory of External
Economies\nSpecialized Suppliers\nLabor Market Pooling\nKnowledge
Spillovers\nExternal Economies and Market Equilibrium\nExternal Economies and
International Trade\nExternal Economies, Output, and Prices\nExternal Economies and
the Pattern of Trade\nTrade and Welfare with External Economies\nDynamic Increasing
Returns\nInterregional Trade and Economic Geography\nSUMMARY\nKEY
TERMS\nPROBLEMS\nFURTHER READINGS\nCHAPTER 8 Firms in the Global Economy: Export
Decisions, Outsourcing, and Multinational Enterprises\nLEARNING GOALS\nThe Theory of
Imperfect Competition\nMonopoly: A Brief Review\nMarginal Revenue and Price\nAverage
and Marginal Costs\nMonopolistic Competition\nAssumptions of the Model\nMarket
Equilibrium\nMonopolistic Competition and Trade\nThe Effects of Increased Market
Size\nGains from an Integrated Market: A Numerical Example\nThe Significance of
Intra-Industry Trade\nFirm Responses to Trade: Winners, Losers, and Industry
Performance\nPerformance Differences across Producers\nThe Effects of Increased
Market Size\nTrade Costs and Export Decisions\nDumping\nMultinationals and
Outsourcing\nThe Firm's Decision Regarding Foreign Direct
Investment\nOutsourcing\nConsequences of Multinationals and Foreign
Outsourcing\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER READINGS\nAPPENDIX TO CHAPTER
8\nDetermining Marginal Revenue\nPART TWO International Trade Policy\nCHAPTER 9 The
Instruments of Trade Policy\nLEARNING GOALS\nBasic Tariff Analysis\nSupply, Demand,
and Trade in a Single Industry\nEffects of a Tariff\nMeasuring the Amount of
Protection\nCosts and Benefits of a Tariff\nConsumer and Producer Surplus\nMeasuring
the Costs and Benefits\nOther Instruments of Trade Policy\nExport Subsidies:
Theory\nImport Quotas: Theory\nVoluntary Export Restraints\nJAPANESE AUTOS\nCHINESE
SOLAR PANELS\nLocal Content Requirements\nOther Trade Policy Instruments\nThe Effects
of Trade Policy: A Summary\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER READINGS\nAPPEND
TO CHAPTER 9\nTariffs and Import Quotas in the Presence of Monopoly\nThe Model with
Free Trade\nThe Model with a Tariff\nThe Model with an Import Quota\nComparing a
Tariff and a Quota\nCHAPTER 10 The Political Economy of Trade Policy\nLEARNING
GOALS\nThe Case for Free Trade\nFree Trade and Efficiency\nAdditional Gains from Free
Trade1\nRent Seeking\nPolitical Argument for Free Trade\nNational Welfare Arguments
against Free Trade\nThe Terms of Trade Argument for a Tariff\nThe Domestic Market
Failure Argument against Free Trade\nHow Convincing Is the Market Failure
Argument?\nIncome Distribution and Trade Policy\nElectoral Competition\nCollective
Action\nModeling the Political Process\nWho Gets
Protected?\nAgriculture\nClothing\nInternational Negotiations and Trade Policy\nThe
Advantages of Negotiation\nInternational Trade Agreements: A Brief History\nThe
Uruguay Round\nTrade Liberalization\nAdministrative Reforms: From the GATT to the
WTO\nBenefits and Costs\nThe End of Trade Agreements?\nPreferential Trading
Agreements\nThe Trans-Pacific Partnership\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER
READINGS\nAPPENDIX TO CHAPTER 10\nProving That the Optimum Tariff Is Positive\nDemand
and Supply\nThe Tariff and Prices\nThe Tariff and Domestic Welfare\nCHAPTER 11 Trade
Policy in Developing Countries\nLEARNING GOALS\nImport-Substituting
Industrialization\nThe Infant Industry Argument\nProblems with the Infant Industry
Argument\nMarket Failure Justifications for Infant Industry Protection\nPromoting
Manufacturing through Protection\nResults of Favoring Manufacturing: Problems of
Import-Substituting Industrialization\nTrade Liberalization since 1985\nTrade and
Growth: Takeoff in Asia\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER READINGS\nCHAPTER 12
Controversies in Trade Policy\nLEARNING GOALS\nSophisticated Arguments for Activist
Trade Policy\nTechnology and Externalities\nThe Case for Government Support of High-
Technology Industries\nThe Rise, Fall, and Rise of High-Tech Worries\nImperfect
Competition and Strategic Trade Policy\nThe Brander-Spencer Analysis: An
Example\nProblems with the Brander-Spencer Analysis\nGlobalization and Low-Wage
Labor\nThe Anti-Globalization Movement\nTrade and Wages Revisited\nLabor Standards
and Trade Negotiations\nEnvironmental and Cultural Issues\nThe WTO and National
Independence\nGlobalization and the Environment\nGlobalization, Growth, and
Pollution\nThe Problem of â■■Pollution Havensâ■■\nThe Carbon Tariff Dispute\nTrade
Shocks and Their Impact on Communities\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER
READINGS\nPART THREE Exchange Rates and Open-Economy Macroeconomics\nCHAPTER 13
National Income Accounting and the Balance of Payments\nLEARNING GOALS\nThe National
Income Accounts\nNational Product and National Income\nCapital Depreciation and
International Transfers\nGross Domestic Product\nNational Income Accounting for an
Open Economy\nConsumption\nInvestment\nGovernment Purchases\nThe National Income
Identity for an Open Economy\nAn Imaginary Open Economy\nThe Current Account and
Foreign Indebtedness\nSaving and the Current Account\nPrivate and Government
Saving\nThe Balance of Payments Accounts\nExamples of Paired Transactions\nThe
Fundamental Balance of Payments Identity\nThe Current Account, Once Again\nThe
Capital Account\nThe Financial Account\nStatistical Discrepancy\nOfficial Reserve
Transactions\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER READINGS\nCHAPTER 14 Exchange
Rates and the Foreign Exchange Market: An Asset Approach\nLEARNING GOALS\nExchange
Rates and International Transactions\nDomestic and Foreign Prices\nExchange Rates and
Relative Prices\nThe Foreign Exchange Market\nThe Actors\nCharacteristics of the
Market\nSpot Rates and Forward Rates\nForeign Exchange Swaps\nFutures and
Options\nThe Demand for Foreign Currency Assets\nAssets and Asset Returns\nDefining
Asset Returns\nThe Real Rate of Return\nRisk and Liquidity\nInterest Rates\nExchange
Rates and Asset Returns\nA Simple Rule\nReturn, Risk, and Liquidity in the Foreign
Exchange Market\nEquilibrium in the Foreign Exchange Market\nInterest Parity: The
Basic Equilibrium Condition\nHow Changes in the Current Exchange Rate Affect Expected
Returns\nThe Equilibrium Exchange Rate\nInterest Rates, Expectations, and
Equilibrium\nThe Effect of Changing Interest Rates on the Current Exchange Rate\nThe
Effect of Changing Expectations on the Current Exchange Rate\nSUMMARY\nKEY
TERMS\nPROBLEMS\nFURTHER READINGS\nAPPENDIX TO CHAPTER 14\nForward Exchange Rates a
Covered Interest Parity\nCHAPTER 15 Money, Interest Rates, and Exchange
Rates\nLEARNING GOALS\nMoney Defined: A Brief Review\nMoney as a Medium of
Exchange\nMoney as a Unit of Account\nMoney as a Store of Value\nWhat Is Money?\nHow
the Money Supply Is Determined\nThe Demand for Money by Individuals\nExpected
Return\nRisk\nLiquidity\nAggregate Money Demand\nThe Equilibrium Interest Rate: The
Interaction of Money Supply and Demand\nEquilibrium in the Money Market\nInterest
Rates and the Money Supply\nOutput and the Interest Rate\nThe Money Supply and the
Exchange Rate in the Short Run\nLinking Money, the Interest Rate, and the Exchange
Rate\nU.S. Money Supply and the Dollar/Euro Exchange Rate\nEurope's Money Supply and
the Dollar/Euro Exchange Rate\nMoney, the Price Level, and the Exchange Rate in the
Long Run\nMoney and Money Prices\nThe Long-Run Effects of Money Supply
Changes\nEmpirical Evidence on Money Supplies and Price Levels\nMoney and the
Exchange Rate in the Long Run\nInflation and Exchange Rate Dynamics\nShort-Run Price
Rigidity versus Long-Run Price Flexibility\nPermanent Money Supply Changes and the
Exchange Rate\nExchange Rate Overshooting\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER
READINGS\nCHAPTER 16 Price Levels and the Exchange Rate in the Long Run\nLEARNING
GOALS\nThe Law of One Price\nPurchasing Power Parity\nThe Relationship between PPP
and the Law of One Price\nAbsolute PPP and Relative PPP\nA Long-Run Exchange Rate
Model Based on PPP\nThe Fundamental Equation of the Monetary Approach\nOngoing
Inflation, Interest Parity, and PPP\nThe Fisher Effect\nEmpirical Evidence on PPP and
the Law of One Price\nExplaining the Problems with PPP\nTrade Barriers and
Nontradables\nDepartures from Free Competition\nDifferences in Consumption Patterns
and Price Level Measurement\nPPP in the Short Run and in the Long Run\nBeyond
Purchasing Power Parity: A General Model of Long-Run Exchange Rates\nThe Real
Exchange Rate\nDemand, Supply, and the Long-Run Real Exchange Rate\nNominal and Real
Exchange Rates in Long-Run Equilibrium\nInternational Interest Rate Differences and
the Real Exchange Rate\nReal Interest Parity\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER
READINGS\nAPPENDIX TO CHAPTER 16\nThe Fisher Effect, the Interest Rate, and the
Exchange Rate under the Flexible-Price Monetary Approach\nCHAPTER 17 Output and the
Exchange Rate in the Short Run\nLEARNING GOALS\nDeterminants of Aggregate Demand in
an Open Economy\nDeterminants of Consumption Demand\nDeterminants of the Current
Account\nHow Real Exchange Rate Changes Affect the Current Account\nHow Disposable
Income Changes Affect the Current Account\nThe Equation of Aggregate Demand\nThe Real
Exchange Rate and Aggregate Demand\nReal Income and Aggregate Demand\nHow Output Is
Determined in the Short Run\nOutput Market Equilibrium in the Short Run: The DD
Schedule\nOutput, the Exchange Rate, and Output Market Equilibrium\nDeriving the DD
Schedule\nFactors That Shift the DD Schedule\nAsset Market Equilibrium in the Short
Run: The AA Schedule\nOutput, the Exchange Rate, and Asset Market
Equilibrium\nDeriving the AA Schedule\nFactors That Shift the AA Schedule\nShort-Run
Equilibrium for an Open Economy: Putting the DD and AA Schedules Together\nTemporary
Changes in Monetary and Fiscal Policy\nMonetary Policy\nFiscal Policy\nPolicies to
Maintain Full Employment\nInflation Bias and Other Problems of Policy
Formulation\nPermanent Shifts in Monetary and Fiscal Policy\nA Permanent Increase in
the Money Supply\nAdjustment to a Permanent Increase in the Money Supply\nA Permanent
Fiscal Expansion\nMacroeconomic Policies and the Current Account\nGradual Trade Flow
Adjustment and Current Account Dynamics\nThe J-Curve\nExchange Rate Pass-Through and
Inflation\nThe Current Account, Wealth, and Exchange Rate Dynamics\nThe Liquidity
Trap\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER READINGS\nAPPENDIX 1 TO CHAPTER
17\nIntertemporal Trade and Consumption Demand\nAPPENDIX 2 TO CHAPTER 17\nThe
Marshall-Lerner Condition and Empirical Estimates of Trade Elasticitise\nCHAPTER 18
Fixed Exchange Rates and Foreign Exchange Intervention\nLEARNING GOALS\nWhy Study
Fixed Exchange Rates?\nCentral Bank Intervention and the Money Supply\nThe Central
Bank Balance Sheet and the Money Supply\nForeign Exchange Intervention and the Money
Supply\nSterilization\nThe Balance of Payments and the Money Supply\nHow the Central
Bank Fixes the Exchange Rate\nForeign Exchange Market Equilibrium under a Fixed
Exchange Rate\nMoney Market Equilibrium under a Fixed Exchange Rate\nA Diagrammatic
Analysis\nStabilization Policies with a Fixed Exchange Rate\nMonetary Policy\nFiscal
Policy\nChanges in the Exchange Rate\nAdjustment to Fiscal Policy and Exchange Rate
Changes\nBalance of Payments Crises and Capital Flight\nManaged Floating and
Sterilized Intervention\nPerfect Asset Substitutability and the Ineffectiveness of
Sterilized Intervention\nForeign Exchange Market Equilibrium under Imperfect Asset
Substitutability\nThe Effects of Sterilized Intervention with Imperfect Asset
Substitutability\nEvidence on the Effects of Sterilized Intervention\nReserve
Currencies in the World Monetary System\nThe Mechanics of a Reserve Currency
Standard\nThe Asymmetric Position of the Reserve Center\nThe Gold Standard\nThe
Mechanics of a Gold Standard\nSymmetric Monetary Adjustment under a Gold
Standard\nBenefits and Drawbacks of the Gold Standard\nThe Bimetallic Standard\nThe
Gold Exchange Standard\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER READINGS\nAPPENDIX 1
CHAPTER 18\nEquilibrium in the Foreign Exchange Market with Imperfect Asset
Substitutability\nDemand\nSupply\nEquilibrium\nAPPENDIX 2 TO CHAPTER 18\nThe Timing
of Balance of Payments Crises\nPART FOUR International Macroeconomic Policy\nCHAPTER
19 INTERNATIONAL MONETARY SYSTEMS: AN HISTORICAL OVERVIEW\nLEARNING
GOALS\nMacroeconomic Policy Goals in an Open Economy\nInternal Balance: Full
Employment and Price Level Stability\nExternal Balance: The Optimal Level of the
Current Account\nProblems with Excessive Current Account Deficits\nProblems with
Excessive Current Account Surpluses\nSummary\nClassifying Monetary Systems: The Open-
Economy Monetary Trilemma\nInternational Macroeconomic Policy under the Gold
Standard, 1870â■■1914\nOrigins of the Gold Standard\nExternal Balance under the Gold
Standard\nThe Price-Specie-Flow Mechanism\nThe Gold Standard â■■Rules of the Gameâ■■:
Myth and Reality\nInternal Balance under the Gold Standard\nThe Interwar Years,
1918â■■1939\nThe Fleeting Return to Gold\nInternational Economic Disintegration\nThe
Bretton Woods System and the International Monetary Fund\nGoals and Structure of the
IMF\nConvertibility and the Expansion of Private Financial Flows\nSpeculative Capital
Flows and Crises\nAnalyzing Policy Options for Reaching Internal and External
Balance\nMaintaining Internal Balance\nMaintaining External Balance\nExpenditure-
Changing and Expenditure-Switching Policies\nThe External Balance Problem of the
United States under Bretton Woods\nThe Mechanics of Imported
Inflation\nAssessment\nThe Case for Floating Exchange Rates\nMonetary Policy
Autonomy\nSymmetry\nExchange Rates as Automatic Stabilizers\nExchange Rates and
External Balance\nINFLATION AND DISINFLATION, 1973â■■1982\nTHE STRONG DOLLAR AN
PLAZA ACCORD\nMacroeconomic Interdependence under a Floating Rate\nCRISES IN EUROPE
AND ASIA, 1990â■■1999\nTHE DOT-COM CRASH AND THE EMERGENCE OF GLOBAL IMBAL
GLOBAL FINANCIAL CRISIS\nWhat Has Been Learned Since 1973?\nMonetary Policy
Autonomy\nSymmetry\nThe Exchange Rate as an Automatic Stabilizer\nExternal
Balance\nThe Problem of Policy Coordination\nAre Fixed Exchange Rates Even an Option
for Most Countries?\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER READINGS\nAPPENDIX TO
CHAPTER 19\nInternational Policy Coordination Failures\nCHAPTER 20 Financial
Globalization: Opportunity and Crisis\nLEARNING GOALS\nThe International Capital
Market and the Gains from Trade\nThree Types of Gain from Trade\nRisk
Aversion\nPortfolio Diversification as a Motive for International Asset Trade\nThe
Menu of International Assets: Debt versus Equity\nInternational Banking and the
International Capital Market\nThe Structure of the International Capital
Market\nOffshore Banking and Offshore Currency Trading\nThe Shadow Banking
System\nBanking and Financial Fragility\nThe Problem of Bank Failure\nGovernment
Safeguards against Financial Instability\nMoral Hazard and the Problem of â■■Too Big
to Failâ■■\nThe Challenge of Regulating International Banking\nThe Financial
Trilemma\nInternational Regulatory Cooperation through 2007\nInternational Regulatory
Initiatives after the Global Financial Crisis\nBasel III\nThe Financial Stability
Board\nNational Reforms\nThe Macroprudential Perspective\nNational Sovereignty and
the Limits of Globalization\nHow Well Have International Financial Markets Allocated
Capital and Risk?\nThe Extent of International Portfolio Diversification\nThe Extent
of Intertemporal Trade\nOnshore-Offshore Interest Differentials\nThe Efficiency of
the Foreign Exchange Market\nStudies Based on Interest Parity\nThe Role of Risk
Premiums\nTests for Excessive Volatility\nThe Bottom Line\nSUMMARY\nKEY
TERMS\nPROBLEMS\nFURTHER READINGS\nCHAPTER 21 Optimum Currency Areas and the
Euro\nLEARNING GOALS\nHow the European Single Currency Evolved\nWhat Has Driven
European Monetary Cooperation?\nThe European Monetary System, 1979â■■1998\nGerman
Monetary Dominance and the Credibility Theory of the EMS\nMarket Integration
Initiatives\nEuropean Economic and Monetary Union\nThe Euro and Economic Policy in
the Euro Zone\nThe Maastricht Convergence Criteria and the Stability and Growth
Pact\nThe European Central Bank and the Eurosystem\nThe Revised Exchange Rate
Mechanism\nThe Theory of Optimum Currency Areas\nEconomic Integration and the
Benefits of a Fixed Exchange Rate Area: The GG Schedule\nEconomic Integration and the
Costs of a Fixed Exchange Rate Area: The LL Schedule\nThe Decision to Join a
Currency Area: Putting the GG and LL Schedules Together\nWhat Is an Optimum Currency
Area?\nOther Important Considerations\nSimilarity of Economic Structure\nFiscal
Federalism\nBanking Union\nTHE EXTENT OF INTRA-EUROPEAN TRADE\nHOW MOBILE IS EU
LABOR FORCE?\nOTHER CONSIDERATIONS\nThe Euro Crisis and the Future of EMU\nOrigins
of the Crisis\nThe Tinder\nThe Spark\nSelf-Fulfilling Government Default and the
â■■Doom Loopâ■■\nA Broader Crisis and Policy Responses\nECB Outright Monetary
Transactions\nThe Future of EMU\nSUMMARY\nKEY TERMS\nPROBLEMS\nFURTHER
READINGS\nCHAPTER 22 Developing Countries: Growth, Crisis, and Reform\nLEARNING
GOALS\nIncome, Wealth, and Growth in the World Economy\nThe Gap between Rich and
Poor\nHas the World Income Gap Narrowed Over Time?\nThe Importance of Developing
Countries for Global Growth\nStructural Features of Developing Countries\nDeveloping-
Country Borrowing and Debt\nThe Economics of Financial Inflows to Developing
Countries\nThe Problem of Default\nAlternative Forms of Financial Inflow\nThe Problem
of â■■Original Sinâ■■\nThe Debt Crisis of the 1980s\nReforms, Capital Inflows, and
the Return of Crisis\nArgentina\nBrazil\nChile\nMexico\nEast Asia: Success and
Crisis\nThe East Asian Economic Miracle\nAsian Weaknesses\nThe Asian Financial
Crisis\nLessons of Developing-Country Crises\nReforming the World's Financial
â■■Architectureâ■■\nCapital Mobility and the Trilemma of the Exchange Rate
Regime\nâ■■Prophylacticâ■■ Measures\nCoping with Crisis\nUnderstanding Global Capital
Flows and the Global Distribution of Income: Is Geography Destiny?\nSUMMARY\nKEY
TERMS\nPROBLEMS\nFURTHER READINGS\nMathematical Postscripts\nPOSTSCRIPT TO CH
The Factor-Proportions Model\nFactor Prices and Costs\nThe Basic Equations in the
Factor-Proportions Model\nGoods Prices and Factor Prices\nFactor Supplies and
Outputs\nPOSTSCRIPT TO CHAPTER 6 The Trading World Economy\nSupply, Demand, and
Equilibrium\nSupply, Demand, and the Stability of Equilibrium\nEffects of Changes in
Supply and Demand\nEconomic Growth\nA Transfer of Income\nA Tariff\nPOSTSCRIPT TO
CHAPTER 8 The Monopolistic Competition Model\nPOSTSCRIPT TO CHAPTER 20 Risk Aversion
and International Portfolio Diversification\nAn Analytical Derivation of the Optimal
Portfolio\nA Diagrammatic Derivation of the Optimal Portfolio\nThe Effects of
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