International Economics

by Gerber, James

• ISBN13: 9780201726121
• ISBN10: 0201726122
• Edition: 2nd
• Format: Hardcover
• Copyright: 2002-01-01
• Publisher: Addison Wesley

Summary

International Economics, Second Edition, is a survey of international economics with a flexible approach that accommodates the needs of economics non-majors and majors alike. Students who have had a principles of economics course will easily understand the presentation of international economics in Gerber's text. the author addresses the needs of a heterogeneous student audience in a non-technical international economics course while focusing on institutions, policy, and real-world case studies. the book has received accolades from many instructors, who have praised it as mainstream, up-to-date, and easily comprehensible.

Table of Contents

Preface	xiv
PART 1 INTRODUCTION AND INSTITUTIONS	1	(38)
The United States in a Global Economy	2	(16)
Introduction	2	(1)
Globalization in Perspective	3	(9)
The Growth of World Trade	4	(1)
Capital and Labor Mobility	5	(3)
New Features of the Global Economy	8	(2)
Trade and Economic Growth	10	(2)
Eleven Issues in the International Economy	12	(4)
The Gains from Trade (Chapters 3, 4, and 5)	12	(1)
Wages, Jobs, and Protection (Chapters 3, 6, 7, and 8)	12	(1)
Trade Deficits (Chapters 9 and 11)	13	(1)
Regional Trade Agreements (Chapters 2, 13, and 14)	13	(1)
The Resolution of Trade Conflicts (Chapters 2, 7, and 8)	13	(1)
The Role of International Institutions (Chapters 2 and 12)	14	(1)
Exchange Rates and the Macroeconomy (Chapters 10 and 11)	14	(1)
Financial Crises and Global Contagion (Chapters 12)	15	(1)
Crisis and Reform in Latin America (Chapters 15)	15	(1)
Export-Led Growth in East Asia (Chapters 16)	15	(1)
The Integration of Ex-Socialist Countries into the World Economy (Chapters 17)
Vocabulary	16	(1)
Study Questions	16	(2)
International Economic Institutions Since World War II	18	(21)
Introduction: International Institutions and Issues Since World War II	18	(1)
International Institutions	18	(1)
What Is an ``Institution''?	18	(1)
A Taxonomy of International Economic Institutions	19	(1)
The IMF, the World Bank, and the WTO	19	(5)
The IMF and World Bank	19	(3)
The GATT, the Uruguay Round, and the WTO	22	(1)
Case Study: The GATT Rounds	23	(1)
Regional Trade Agreements	24	(4)
Four Types of Regional Trade Agreements	25	(1)
Case Study: Prominent Regional Trade Agreements	26	(2)
The Role of International Economic Institutions	28	(5)
The Definition of Public Goods	29	(1)
Maintaining Order and Reducing Uncertainty	30	(2)
Case Study: Bretton Woods	32	(1)
The Opposition to International Institutions	33	(3)
Summary	36	(1)
Vocabulary	37	(1)
Study Questions	37	(2)
PART 2 INTERNATIONAL TRADE	39	(132)
Comparative Advantage and the Gains from Trade	40	(18)
Introduction	40	(4)
Adam Smith and the Attack on Economic Nationalism	40	(1)
A Simple Model of Production and Trade	41	(1)
Absolute Productivity Advantage and the Gains from Trade	42	(2)
Comparative Productivity Advantage and the Gains from Trade	44	(6)
The Production Possibilities Curve	44	(1)
Relative Prices	45	(1)
The Price Line, or Trade Line	46	(1)
The Gains from Trade	47	(2)
Domestic Prices and the Trade Price	49	(1)
Absolute and Comparative Productivity Advantage Constrasted	50	(1)
Comparative Advantage and ``Competitiveness''	50	(4)
Case Study: The U.S. and Mexican Auto Industries	52	(2)
Economic Restructuring	54	(2)
Summary	56	(1)
Vocabulary	56	(1)
Study Questions	57	(1)
Comparative Advantage and Factor Endowments	58	(26)
Introduction	58	(1)
Modern Trade Theory	58	(5)
The Heckscher-Ohlin (HO) Trade Model	59	(1)
Gains from Trade in the HO Model	60	(3)
Trade and Income Distribution	63	(7)
The Stolper-Samuelson Theorem	64	(2)
The Specific Factors Model	66	(2)
Case Study: Forecasts of Winners and Losers Under NAFTA	68	(2)
Empirical Tests of the Theory of Comparative Advantage	70	(1)
Extension of the Heckscher-Ohlin Model	71	(6)
The Product Cycle	72	(2)
Intra-firm Trade	74	(1)
Case Study: United States-China Trade	74	(3)
The Impact of Trade on Wages and Jobs	77	(2)
Summary	79	(1)
Vocabulary	80	(1)
Study Questions	80	(1)
Appendix: Finding Trade Data	81	(3)
U.S. Data	81	(1)
International Data	82	(2)
Beyond Comparative Advantage	84	(27)
Introduction	84	(1)
Intraindustry Trade	85	(5)
Measures of Intraindustry Trade	85	(1)
Characteristics of Intraindustry Trade	86	(2)
The Gains from Intraindustry Trade	88	(1)
Case Study: United States-Canada Trade	89	(1)
Trade and Geography	90	(4)
External Economies of Scale	91	(1)
Trade and External Economies	92	(2)
Industrial Policy	94	(9)
Industrial Policies and Market Failure	95	(3)
Strategic Trade	98	(2)
Industrial Policy Tools	100	(1)
Problems with Industrial Policies	101	(2)
U.S. Industrial Policies	103	(4)
The Political Debate of the 1980s	104	(2)
Case Study: Targeting Motor Vehicle Manufacturing Processes	106	(1)
Summary	107	(1)
Vocabulary	108	(1)
Study Questions	108	(1)
Appendix: A Graphical Illustration of Prices and Costs with Monopolistic Competition	109	(2)
The Theory of Tariffs and Quotas	111	(20)
Introduction	111	(10)
Analysis of a Tariff	111	(1)
Consumer and Producer Surplus	111	(2)
The Effect of a Tariff on Prices, Output, and Consumption	113	(2)
The Effect of a Tariff on Resource Allocation and Income Distribution	115	(2)
Other Potential Costs	117	(1)
The Large Country Case	118	(1)
Effective Versus Nominal Rates of Protection	119	(2)
Analysis of a Quota	121	(8)
Types of Quotas	121	(1)
The Effect on the Profits of Foreign Producers	122	(3)
Hidden Forms of Protection	125	(1)
Case Study: U.S. VERs on Japanese Autos in the 1980s	125	(2)
Case Study: Japanese Snow, U.S. Meat, and Mexican Tuna	127	(2)
Summary	129	(1)
Vocabulary	129	(1)
Study Questions	130	(1)
Commercial Policy	131	(18)
Introduction	131	(1)
The Costs of Protection in the United States and Japan	131	(7)
Total Costs and Costs per Job Saved in Both Countries	132	(3)
The Logic of Collective Action	135	(1)
Case Study: The Uruguay Round of the GATT Negotiations	136	(2)
Why Nations Protect Their Industries	138	(5)
The Labor Argument	138	(1)
The Infant Industry Argument	139	(1)
The National Security Argument	140	(1)
The Retaliation Argument	141	(1)
Case Study: Economic Sanctions	142	(1)
The Politics of Protection in the United States	143	(4)
Countervailing Duties	144	(1)
Antidumping Duties	144	(2)
Escape Clause Relief	146	(1)
Section 300 and Super 301	146	(1)
Summary	147	(1)
Vocabulary	148	(1)
Study Questions	148	(1)
International Trade and Labor and Environmental Standards	149	(22)
Introduction	149	(1)
Setting Standards: Harmonization, Mutual Recognition, or Separate?	150	(3)
Case Study: Income, Environment, and Society	151	(2)
Labor Standards	153	(9)
Defining Labor Standards	154	(1)
Case Study: Child Labor	154	(3)
Labor Standards and Trade	157	(2)
Evidence on Low Standards as a Predatory Practice	159	(1)
Case Study: The International Labor Organization (ILO)	160	(2)
Trade and the Environment	162	(3)
Transboundary and Non-Transboundary Effects	162	(2)
Case Study: Trade Barriers and Endangered Species	164	(1)
Alternatives to Trade Measures	165	(4)
Labels for Exports	166	(1)
Requiring Home Country Standards	167	(1)
Increasing International Negotiations	168	(1)
Summary	169	(1)
Vocabulary	170	(1)
Study Questions	170	(1)
PART 3 INTERNATIONAL FINANCE	171	(118)
Trade and the Balance of Payments	172	(27)
Introduction to the Current Account	172	(3)
The Merchandise Trade Balance	172	(1)
The Current Account Balance	173	(2)
Introduction to the Financial and Capital Accounts	175	(9)
Types of Financial Flows	178	(4)
Limits on Financial Flows	182	(1)
Case Study: The Mexican Sexenio Crisis	183	(1)
The Current Account and the Macroeconomy	184	(8)
The National Income and Product Accounts	185	(6)
Are Current Account Deficits Harmful?	191	(1)
The International Investment Position	192	(2)
Summary	194	(1)
Vocabulary	195	(1)
Study Questions	196	(1)
Appendix 1: Measuring the International Investment Position	197	(1)
Appendix 2: Balance of Payments Data	198	(1)
Exchange Rates and Exchange Rate Systems	199	(39)
Introduction	199	(1)
Exchange Rates and Currency Trading	199	(5)
Reasons for Holding Foreign Currencies	201	(1)
Institutions	202	(1)
Exchange Rate Risk	203	(1)
The Supply and Demand for Foreign Exchange	204	(12)
Supply and Demand with Flexible Exchange Rates	204	(2)
Exchange Rates in the Long Run	206	(4)
Exchange Rates in the Medium Run and Short Run	210	(4)
Case Study: The Largest Market in the World	214	(2)
The Real Exchange Rate	216	(9)
Alternatives to Flexible Exchange Rates	218	(1)
Fixed Exchange Rate Systems	219	(4)
Case Study: Dollarization and Currency Boards	223	(2)
Choosing the Right Exchange Rate System	225	(4)
Case Study: The End of the Bretton Woods System	227	(2)
Single Currency Areas	229	(5)
Conditions for Adopting a Single Currency	231	(1)
Case Study: Is the NAFTA Region an Optimal Currency Area?	232	(2)
Summary	234	(1)
Vocabulary	235	(1)
Study Questions	235	(1)
Appendix: The Interest Rate Parity Condition	236	(2)
An Introduction to Open Economy Macroeconomics	238	(25)
Introduction	238	(1)
The Circular Flow of Expenditure and Income	238	(3)
Fiscal and Monetary Policies	241	(8)
Fiscal Policy	242	(2)
Monetary Policy	244	(2)
Case Study: Fiscal and Monetary Policy During the Great Depression	246	(3)
Current Account Balances Revisited	249	(7)
Fiscal and Monetary Policies, Interest Rates, and Exchange Rates	250	(2)
Fiscal and Monetary Policy and the Current Account	252	(1)
The Long Run	253	(1)
Case Study: The United State's Current Account Deficits of the 1980s and 1990s	254	(2)
Macro Policies for Current Account Imbalances	256	(4)
The Adjustment Process	257	(1)
Case Study: The Adjustment Process in the United States	258	(2)
Macroeconomic Policy Coordination in Developed Countries	260	(1)
Summary	261	(1)
Vocabulary	262	(1)
Study Questions	262	(1)
International Financial Crises	263	(26)
Introduction	263	(1)
Definition of a Financial Crisis	264	(1)
Two Types of International Financial Crises	265	(6)
Crises Caused by Macroeconomic Imbalances	265	(2)
Crises Caused by Valatile Capital Flows	267	(1)
Case Study: The Mexican Peso Crisis of 1994 and 1995	268	(3)
Domestic Issues in Crisis Avoidance	271	(5)
Moral Hazard and Financial Sector Regulation	271	(2)
Exchange Rate Policy	273	(1)
Capital Controls	274	(1)
Case Study: Chilean Taxes on Capital Inflows	275	(1)
Domestic Policies for Crisis Management	276	(6)
Case Study: The Asian Crisis of 1997 and 1998	278	(4)
Reform of the International Financial Architecture	282	(6)
A Lender of Last Resort	283	(1)
Conditionality	284	(4)
Summary	288	(1)
Vocabulary	288	(1)
Study Questions	288	(1)
PART 4 REGIONAL ISSUES IN THE GLOBAL ECONOMY	289	(162)
Economic Integration in North America	290	(30)
Introduction	290	(1)
Economic and Demographic Characteristics of North America	290	(4)
The Canada-U.S. Trade Relationship	294	(4)
The Auto Pact of 1965	294	(1)
The Canadian-U.S. Trade Agreement (CUSTA) of 1989	295	(3)
Recent Mexican Economic History	298	(7)
Import Substitution Industrialization (ISI)	298	(1)
The Onset of the Debt Crisis of 1982	299	(1)
The Lost Decade: 1980s	300	(1)
Structural Reforms in the Mexican Economy	301	(1)
Case Study: Mexico's Export Processing Industry	302	(3)
The North American Free Trade Agreement (NAFTA)	305	(1)
The NAFTA Debate in the United States	306	(5)
Labor Issues	306	(2)
Environmental Issues	308	(2)
Immigration	310	(1)
The Impact of NAFTA	311	(6)
Case Study: The Free Trade Agreement of the Americas	315	(2)
Summary	317	(1)
Vocabulary	318	(1)
Study Questions	318	(2)
The European Union: Many Markets into One	320	(32)
Introduction: The European Union	320	(2)
The Size of the Market in Western Europe	322	(2)
Before the European Union	324	(4)
The Treaty of Rome	324	(1)
Institutional Structure of the EEC	324	(4)
Deepening and Widening the Community in the 1970s and 1980s	328	(3)
Before the Euro	328	(3)
The Second Wave of Deepening: The Single European Act	331	(7)
The Delors Report	332	(1)
Forecasts of the Gains from the Single European Act	333	(1)
Problems in the Implementation of the SEA	334	(4)
The Third Wave of Deepening: The Maastricht Treaty	338	(2)
Monetary Union and the Euro	340	(5)
Costs and Benefits of Monetary Union	340	(2)
The Political Economy of a Single Currency	342	(1)
Implementation of the Single Currency	343	(2)
Widening the European Union	345	(4)
Central and Eastern Europe	345	(3)
A Possible Direction for Institutional Evolution	348	(1)
Summary	349	(1)
Vocabulary	350	(1)
Study Questions	351	(1)
Trade and Policy Reform in Latin America	352	(31)
Defining a ``Latin American'' Economy	352	(1)
Population, Income, and Economic Growth	353	(3)
General Characteristics of Latin American Economies, 1950-2000	356	(2)
Inward Orientation	357	(1)
Inequality	357	(1)
Macroeconomic Instability	357	(1)
The Debt Crisis of the 1980s	357	(1)
Reform Movements of the 1980s and 1990s	357	(1)
Import Substitution Industrialization	358	(1)
Origins and Goals of ISI	358	(2)
Criticisms of ISI	360	(2)
Case Study: ISI in Mexico	362
Macroeconomic Instability and Economic Populism	64	(305)
Populism in Latin America	364	(1)
Case Study: Peronism in Argentina	365	(3)
Case Study: Alan Garcia and Peru	368	(1)
The Debt Crisis of the 1980s	369	(4)
Proximate Causes of the Debt Crisis	369	(1)
Responses to the Debt Crisis	370	(3)
Economic Policy Reform and the ``Washington Consensus''	373	(8)
Stabilization Policies to Control Inflation	373	(2)
Structural Reform and Open Trade	375	(4)
Case Study: The Washington Consensus on Economic Policy Reform	379	(2)
Summary	381	(1)
Vocabulary	382	(1)
Study Questions	382	(1)
Export-Oriented Growth in East Asia	383	(29)
The High-Performance Asian Economics	383	(2)
Population, Income, and Economic Growth	385	(1)
General Characteristics of Growth in the HPAEs	386	(6)
Shared Growth	387	(3)
Rapid Accumulation of Physical and Human Capital	390	(1)
Rapid Growth of Manufactured Exports	391	(1)
Stable Macroconomic Environments	392	(1)
The Institutional Environment	392	(7)
Fiscal Discipline	393	(1)
Business-Government Relations	394	(1)
Case Study: Deliberation Councils in the Ministry of International Trade and Industry (MITI)	394	(1)
Avoid Rent Seeking	395	(2)
Case Study: Japanese keiretsu	397	(2)
The Role of Industrial Policies	399	(4)
Targeting Specific Industries in the HPAEs	399	(1)
Did Industrial Policies Work?	400	(2)
Case Study: HCI in Korea	402	(1)
The Role of Manufactured Exports	403	(4)
The Connections Between Growth and Exports	403	(2)
Is Export Promotion a Good Model for Other Regions?	405	(1)
Case Study: East Asian Trade Blocs	406	(1)
Is There an Asian Model of Economic Growth?	407	(3)
Summary	410	(1)
Vocabulary	410	(1)
Study Questions	411	(1)
Economic Integration in the Transition Economies	412	(39)
Introduction: Economies in Transition	412	(3)
The Legacy of Central Planning	415	(1)
Economic Indicators	416	(5)
The Tasks of Reform	421	(6)
Economic Stabilization	422	(1)
Liberalization	422	(1)
Defining Property Rights	423	(1)
Institutional Development	423	(1)
Case Study: Should the Transition be Fast or Slow?	424	(3)
Old and New Trade Relations	427	(3)
The Council for Mutual Economic Assistance (CMEA)	427	(3)
Trade Policy and the Transition	430	(8)
Steps to Trade Liberalization	431	(1)
Case Study: China's Economic Reform, Foreign Trade, and Investment	431	(4)
Transitional Protection and Balance of Payments Problems	435	(1)
Exchange Rate Regimes and Convertability	436	(2)
The Links Between Trade Policy and Other Areas of Reform	438	(1)
Integration into the World Trading System	438	(1)
The WTO and the Transitional Economies	439	(1)
Integration with Western Europe	440	(1)
Other Regional Agreements	441
The Impact of the Transition Economies on the World Economy	433	(14)
Case Study: China's Accession to the WTO	444	(3)
Summary	447	(1)
Vocabulary	448	(1)
Study Questions	449	(2)
Suggested Readings	451	(9)
Glossary	460	(13)
Index	473