Applied International Economics, 5th Edition PDF by W Charles Sawyer and Richard L Sprinkle

By

Applied International Economics, 5th Edition

By W Charles Sawyer and Richard L. Sprinkle

Applied International Economics, 5th Edition PDF by Charles Sawyer and Richard L Sprinkle

Contents:

List of figures xv

List of boxes xx

Preface xxii

Acknowledgments xxviii

List of tables xviii

CHAPTER 1 Introduction: an overview of the world economy 1

Introduction 1

The scope of international economics 2

The output of the world economy 3

Imports and exports of goods in the world economy 4

International trade in services 6

Capital fows in the world economy 10

Trends in international production and trade 12

Globalization 14

Summary 17

Key concepts and terms 17

Problems and questions for review 18

Notes 18

References 19

CHAPTER 2 Why countries trade 20

Introduction 20

International trade versus interregional trade 21

Trade in an individual product 21

Trade based on absolute advantage 26

Absolute advantage 26

The gains from specialization and trade with absolute advantage 27

Trade based on comparative advantage 28

Comparative advantage 29

The gains from specialization and trade with comparative advantage 30

Trade based on opportunity costs 32

Opportunity costs 33

The gains from specialization and trade with opportunity costs 33

Dynamic gains from trade 34

Summary 35

Key concepts and terms 36

Problems and questions for review 36

Notes 37

References 37

CHAPTER 3 Comparative advantage and the production possibilities frontier 39

Introduction 39

The production possibilities frontier and constant costs 40

The production possibilities frontier 40

Production and consumption without specialization and trade 42

Production and consumption with specialization and trade 42

The terms of trade 47

Changes in the gains from specialization and trade 47

Demand conditions and the terms of trade 48

Distribution of the gains from trade 49

Trade under increasing opportunity costs 51

Increasing costs and the production possibilities frontier 51

Production and consumption without specialization and trade 54

Production and consumption with specialization and trade 54

International trade under increasing costs: an advanced analysis 58

Summary 64

Key concepts and terms 64

Problems and questions for review 64

Notes 65

References 66

CHAPTER 4 Factor endowments and the commodity composition of trade 67

Introduction 67

The factor-proportions theory 68

Assumptions of the factor-proportions theory 68

The factor-proportions theory 70

Factor-price equalization and the distribution of income 73

Factor-price equalization 73

Trade and the distribution of income 76

Trade and income inequality 78

The specifc-factors model 80

Empirical evidence concerning the factor-proportions theory 82

The Leontief paradox 82

Explanations of the Leontief paradox 83

International trade not explained by the factor-proportions theory 85

Summary 86

Key concepts and terms 86

Problems and questions for review 87

Notes 88

References 89

Appendix 4.1: Factor-proportions theory: an advanced analysis 90

CHAPTER 5 Intra-industry trade 93

Introduction 93

Defning intra-industry trade 93

The increasing importance of intra-industry trade 96

Intra-industry trade in homogeneous products 98

Intra-industry trade in differentiated products 98

Economies of scale 100

The product cycle 104

Overlapping demands 106

Empirical evidence on intra-industry trade 109

The welfare implications of intra-industry trade 110

Summary 113

Key concepts and terms 114

Problems and questions for review 114

Notes 115

References 115

CHAPTER 6 THE FIRM IN THE WORLD ECONOMY 117

Introduction 117

The frm in international trade 118

Firm heterogeneity 118

The multinational corporation 123

The importance of MNCs 123

Reasons for the existence of MNCs 127

Offshoring and MNCs 129

Global value chains 130

Public policy toward MNCs 131

Summary 133

Key concepts and terms 133

Problems and questions for review 133

Notes 134

References 134

CHAPTER 7 International factor movements 136

Introduction 136

International trade versus international factor movements 137

International movements of capital 138

Reasons for the international movement of capital 139

Welfare effects of international capital movements 140

Capital movements and public policy 142

International movements of labor 143

Reasons for the international movement of labor 144

Welfare effects of the international movement of labor 146

Immigration and public policy 149

Summary 150

Key concepts and terms 151

Problems and questions for review 151

Notes 152

References 152

CHAPTER 8 Tariffs 153

Introduction 153

Tariffs: some preliminary details 153

Types of tariffs 154

Methods of valuing imports 155

Welfare effects of trade in an individual product 156

Consumer and producer surplus: a review 156

The effects of free trade 158

The economic effects of tariffs 161

The effects of a tariff for a small country 161

The effects of a tariff for a large country 163

The effective rate of protection 166

Arguments for tariffs 168

Infant government 169

National defense 169

Infant industries 171

Senile industry protection 171

Tariffs, trade, and jobs 173

Summary 174

Key concepts and terms 175

Problems and questions for review 175

Notes 176

References 176

CHAPTER 9 Nontariff distortions to trade 177

Introduction 177

Nontariff barriers to trade 178

Quotas 179

The economic effects of a quota 182

Other nontariff distortions 185

Industrial policy 186

Technical barriers to trade 187

Subsidies 189

Government procurement 189

Corruption and international trade 190

Economic sanctions 192

Labor and environmental standards 193

Transportation costs and trade 196

The gravity equation and international trade 199

Summary 200

Key concepts and terms 201

Problems and questions for review 201

Notes 202

References 202

CHAPTER 10 International trade policy 204

Introduction 204

The political economy of protectionism 205

Protectionism and public choice 205

The structure of protection 210

The evolution of U.S. trade policy 212

The formulation of U.S. trade policy 214

Antidumping, countervailing duties, and safeguards 215

Antidumping 216

Types of dumping 216

History of antidumping law in the United States 217

Countervailing duties 218

Safeguards 219

The General Agreement on Tariffs and Trade (GATT) 220

GATT and multilateral trade negotiations 220

The World Trade Organization (WTO) 223

The future of international trade negotiations 223

Summary 226

Key concepts and terms 227

Problems and questions for review 227

Notes 227

References 229

Appendix 10.1: Price discrimination 230

CHAPTER 11 Regional economic arrangements 231

Introduction 231

Degrees of economic integration 232

Rules of origin in international trade 235

Trade effects of economic integration 236

The static effects of a customs union 238

The European Union 241

NAFTA and other U.S. trade agreements 244

NAFTA 245

Other U.S. trade agreements 246

Multilateralism versus regional trade agreements 248

Summary 251

Key concepts and terms 252

Problems and questions for review 252

Notes 253

References 253

CHAPTER 12 International trade and economic growth 255

Introduction 255

The developing countries 256

Economic development 256

GDP of developing countries 256

Economic growth 258

Preconditions for growth 258

Economic growth and the factors of production 260

Basic growth theory 261

Changes in capital stock and technology 262

International trade and economic growth 263

Openness and growth 263

Capital fows, technology transfers, and economic growth 265

Economic development strategies 266

Primary products 267

Import substitution 271

Export promotion 273

Offcial development assistance 277

The role of offcial development assistance 277

Flows of offcial development assistance 278

Multilateral development organizations 279

The World Bank and regional development banks 280

The United Nations agencies 281

Summary 281

Key concepts and terms 282

Problems and questions for review 282

Notes 282

References 283

CHAPTER 13 National income accounting and the balance of payments 284

Introduction 284

National income accounting 285

The measurement of GDP 285

Items excluded from GDP 285

GDP and changes in prices 286

The components of GDP 286

GDP and the trade balance 288

GDP in a closed economy 288

GDP in an open economy 289

Imports, exports, and GDP 289

Intertemporal trade 290

Saving, investment, the government budget, and the trade balance 291

Adjustments to trade imbalances 292

The balance of payments accounts 295

The balance on current account 295

The balance on capital and fnancial accounts 301

Summary 304

Key concepts and terms 304

Problems and questions for review 305

Notes 305

References 306

CHAPTER 14 Exchange rates and their determination: a basic model 307

Introduction 307

Exchange rates 307

The demand for foreign exchange 310

Shifts in the demand for foreign exchange 311

Changes in domestic income 311

Changes in relative prices 313

The supply of foreign exchange 314

Shifts in the supply of foreign exchange 315

Changes in foreign income 315

Changes in relative prices 316

Equilibrium in the foreign exchange market 317

Changes in the equilibrium exchange rate 318

Exchange rate volatility and international trade 321

Exchange rate pass through 321

Price levels and the exchange rate in the long run 324

The law of one price 324

Purchasing power parity 328

Absolute purchasing power parity 329

Relative purchasing power parity 329

Purchasing power parity in the short run and the long run 330

The real exchange rate 334

Changes in the real exchange rate 338

Summary 341

Key concepts and terms 342

Problems and questions for review 342

Notes 343

References 344

CHAPTER 15 Money, interest rates, and the exchange rate 345

Introduction 345 The equilibrium interest rate: the interaction of money Appendix 15.1:The relationship between the monetary base and

Money defned: a review 346

The supply of money 347

The demand for money 350

supply and demand 351

The interest rate and the exchange rate in the short run 356

Interest rates, the exchange rate, and the balance of payments 362

Summary 366

Key concepts and terms 366

Problems and questions for review 366

Notes 367

References 368

the money supply 368

Appendix 15.2: Interest parity and covered interest arbitrage 369

CHAPTER 16 Open economy macroeconomics 371

Introduction 371

Aggregate demand and aggregate supply: a review 372

Aggregate demand 372

Changes in aggregate demand 373

Aggregate supply 377

Changes in aggregate supply 378

Aggregate equilibrium 382

Determinants of the current account 383

Exports 383

Imports 384

Exchange rate changes and equilibrium output in an open economy 386

Exchange rate appreciation 387

Exchange rate depreciation 390

Exchange rate shocks 392

Summary 396

Key concepts and terms 397

Problems and questions for review 397

Notes 398

References 399

CHAPTER 17 Macroeconomic policy and foating exchange rates 400

Introduction 400

Fiscal and monetary policy 400

Changes in fscal policy 401

Expansionary fscal policy 401

Contractionary fscal policy 406

Changes in monetary policy 409

Expansionary monetary policy 410

Contractionary monetary policy 414

Monetary and fscal policy in an open economy 418

Consistent policy mixes 420

Inconsistent policy mixes 421

Trade fow adjustment and current account dynamics 424

Summary 425

Key concepts and terms 426

Problems and questions for review 427

Notes 427

References 428

CHAPTER 18 Fixed exchange rates and currency unions 430

Introduction 430

Inconvertible currencies 431

Diffculties associated with exchange controls 433

Intervention in the foreign exchange market 437

Macroeconomic adjustment under fxed exchange rates: Part I 440

Macroeconomic adjustment under fxed exchange rates: Part II 442

Fiscal policy and internal balance 444

The effects of expansionary and contractionary fscal policy 446

Sterilization 450

Pegging the exchange rate with monetary policy 452

Currency unions 453

The trilemma 454

The European Monetary Union 455

Summary 458

Key concepts and terms 459

Problems and questions for review 459

Notes 460

References 460

CHAPTER 19 International monetary arrangements 461

Introduction 461

The gold standard 462

The gold standard and monetary policy 462

The macroeconomics of the gold standard 463

Costs and benefts of the gold standard 465

The Bretton Woods system and the International Monetary Fund 466

The Bretton Woods System 467

The International Monetary Fund 468

The demise of the Bretton Woods System 469

The post-Bretton Woods era 470

Clean foats 470

Fixing the exchange rate 471

Options for international monetary reform 473

Summary 476

Key concepts and terms 477

Problems and questions for review 477

Notes 478

References 478

CHAPTER 20 Capital fows and the developing countries 479

Introduction 479

Capital fows to developing countries 480

Debt versus equity 480

Servicing foreign debt 482

Exchange rate shocks 483

Macroeconomic consequences of exchange rate shocks 484

Sources of exchange rate shocks 486

Commodity price shocks 486

Exchange controls 488

Intervention, capital fights, and defaults 490

The IMF and developing countries 494

IMF conditionality 494

The future of the IMF 496

Summary 498

Key concepts and terms 499

Problems and questions for review 499

Note 500

References 500

Appendix: GDP, population, and exports for U.S. regions and states, 2018 501

Glossary 509

Index 518

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