Type:
Solution Manual
International Economics Theory Resource: and Policy Edition:
10th Edition
Author(s):
Paul R. Krugman Maurice Obstfeld Marc Melitz
Online Instructor’s Manual to accompany
International Economics: Theory and Policy Tenth Edition
Paul R. Krugman Princeton University
Maurice Obstfeld University of California, Berkeley
Marc J. Melitz Harvard University Updated by Hisham Foad San Diego State University
Authored by Linda Goldberg Federal Reserve Bank of New York
Michael Klein Tufts University
Jay Shambaugh Dartmouth College
Contents Chapter 1
Introduction ..............................................................................................................1
Chapter 2
World Trade: An Overview ......................................................................................3
Chapter 3
Labor Productivity and Comparative Advantage: The Ricardian Model .................7
Chapter 4
Specific Factors and Income Distribution ..............................................................13
Chapter 5
Resources and Trade: The Heckscher-Ohlin Model ..............................................21
Chapter 6
The Standard Trade Model .....................................................................................27
Chapter 7
External Economies of Scale and the International Location of Production ..........33
Chapter 8
Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises ................................................................................39
Chapter 9
The Instruments of Trade Policy ............................................................................45
Chapter 10
The Political Economy of Trade Policy .................................................................53
Chapter 11
Trade Policy in Developing Countries ...................................................................59
Chapter 12
Controversies in Trade Policy ................................................................................63
Chapter 13 (2)* National Income Accounting and the Balance of Payments ..................................69 Chapter 14 (3) Exchange Rates and the Foreign Exchange Market: An Asset Approach .............75 Chapter 15 (4) Money, Interest Rates, and Exchange Rates ..........................................................83 Chapter 16 (5) Price Levels and the Exchange Rate in the Long Run ...........................................91 Chapter 17 (6) Output and the Exchange Rate in the Short Run ....................................................97 Chapter 18 (7) Fixed Exchange Rates and Foreign Exchange Intervention .................................107 Chapter 19 (8) International Monetary Systems: An Historical Overview ..................................117 Chapter 20 (9) Financial Globalization: Opportunity and Crisis ..................................................127 Chapter 21 (10) Optimum Currency Areas and the Euro ...............................................................133 Chapter 22 (11) Developing Countries: Growth, Crisis, and Reform ............................................141
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International Economics Chapters 13-22 are renumbered for International Finance as Chapters 2-11. .
Chapter 1 Introduction ◼ Chapter Organization What Is International Economics About? The Gains from Trade The Pattern of Trade How Much Trade? Balance of Payments Exchange Rate Determination International Policy Coordination The International Capital Market International Economics: Trade and Money
◼ Chapter Overview The intent of this chapter is to provide both an overview of the subject matter of international economics and to provide a guide to the organization of the text. It is relatively easy for an instructor to motivate the study of international trade and finance. The front pages of newspapers, the covers of magazines, and the lead reports on television news broadcasts herald the interdependence of the U.S. economy with the rest of the world. This interdependence may also be recognized by students through their purchases of imports of all sorts of goods, their personal observations of the effects of dislocations due to international competition, and their experience through travel abroad. The study of the theory of international economics generates an understanding of many key events that shape our domestic and international environment. In recent history, these events include the causes and consequences of the large current account deficits of the United States; the dramatic appreciation of the dollar during the first half of the 1980s followed by its rapid depreciation in the second half of the 1980s; the Latin American debt crisis of the 1980s and the Mexican crisis in late 1994; and the increased pressures for industry protection against foreign competition broadly voiced in the late 1980s and more vocally espoused in the first half of the 1990s. The financial crisis that began in East Asia in 1997 and spread to many countries around the globe and the Economic and Monetary Union in Europe highlight the way in which various national economies are linked and how important it is for us to understand these connections. These global linkages have been highlighted yet again with how a bust in the American housing market rapidly spread throughout the world, turning into a global financial crisis through linkages across international capital markets. At the same time, protests at global economic meetings and a rising wave of protectionist rhetoric have highlighted opposition to globalization. The text material will enable students to understand the economic context in which such events occur.
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Krugman/Obstfeld/Melitz • International Economics: Theory & Policy, Tenth Edition
Chapter 1 of the text presents data demonstrating the growth in trade and the increasing importance of international economics. This chapter also highlights and briefly discusses seven themes that arise throughout the book. These themes are (1) the gains from trade, (2) the pattern of trade, (3) protectionism, (4) the balance of payments, (5) exchange rate determination, (6) international policy coordination, and (7) the international capital market. Students will recognize that many of the central policy debates occurring today come under the rubric of one of these themes. Indeed, it is often a fruitful heuristic to use current events to illustrate the force of the key themes and arguments that are presented throughout the text.
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