INTERNATIONAL MONETARY ECONOMICS:
CHAPTER 1: INTRODUCTION
Introduction
In the early 21st century, nations are more closely linked than ever before through trade in goods and
services, flows of money and investment in each other’s economies.
Policy makers and business leaders in every country must pay attention to changing
economic circumstances around the world.
What ?
The levels of US exports and imports as shares of
Gross Domestic Product from 1960 to 2019.
What does this show ?
There is a long-term upward trend in the shares
of exports and imports.
- International trade has roughly tripled in
importance compared to the economy as
a whole.
Imports have grown more than exports which
leads to a large excess of imports over exports.
These imports are paid with inflows of capital, in
other words by foreign investors.
- Growing relation between national
capital markets.
Imports and exports fell in 2009 during the global
economic crisis and in 2020 during the COVID-19
pandemic.
- There is a close link between world trade
and the overall state of the world
economy.
, What ?
The average of imports and exports as a share of
GDP for a sample of countries.
What does this show ?
The US relies less on international trade than
almost any other country thanks to its size and
the diversity of its resources.
Belgium is a small open economy that is very
dependent on exports and imports from other
countries.
An international perspective is necessary.
International economics: trade and money
Economics of the
international economy
International monetary
International trade analysis
analysis
Focuses on real Focuses on financial
transactions in the transactions in the
international economy. international economy.
- Transactions - Transactions
involving a involving financial
physical assets.
movement of
goods and
services.
,Some actual topics
What ?
Euromoney, December 2021 – January 2022
What does this show ?
In recent years there has been high inflation.
Who are the people ?
Jerome Powell = President of the Federal Reserve
System.
Andrew Bailey = Governor of the central bank of
England.
Philip Lowe = former Governor of the Central Bank
of Australia
Christine Lagarde = President of the European
Central Bank.
What ?
The Financial Times, December 29 2022.
What does this show ?
The Financial Times made inflation the word of the
year.
, What ?
The Financial Times, November 16 2022.
What does this show ?
Over a long period of time we had very low, even
negative, interest rates.
But over time they increased in order to slow down
inflation.
What ?
The Financial Times, February 2 2024.
What does this show ?
Inflation goes down.
What ?
The Financial Times, February 3 2024.
What does this show ?
US payroll increase.
- The labor market is very healthy because of
the creation of jobs.
BUT this can lead to inflation as well.
CHAPTER 1: INTRODUCTION
Introduction
In the early 21st century, nations are more closely linked than ever before through trade in goods and
services, flows of money and investment in each other’s economies.
Policy makers and business leaders in every country must pay attention to changing
economic circumstances around the world.
What ?
The levels of US exports and imports as shares of
Gross Domestic Product from 1960 to 2019.
What does this show ?
There is a long-term upward trend in the shares
of exports and imports.
- International trade has roughly tripled in
importance compared to the economy as
a whole.
Imports have grown more than exports which
leads to a large excess of imports over exports.
These imports are paid with inflows of capital, in
other words by foreign investors.
- Growing relation between national
capital markets.
Imports and exports fell in 2009 during the global
economic crisis and in 2020 during the COVID-19
pandemic.
- There is a close link between world trade
and the overall state of the world
economy.
, What ?
The average of imports and exports as a share of
GDP for a sample of countries.
What does this show ?
The US relies less on international trade than
almost any other country thanks to its size and
the diversity of its resources.
Belgium is a small open economy that is very
dependent on exports and imports from other
countries.
An international perspective is necessary.
International economics: trade and money
Economics of the
international economy
International monetary
International trade analysis
analysis
Focuses on real Focuses on financial
transactions in the transactions in the
international economy. international economy.
- Transactions - Transactions
involving a involving financial
physical assets.
movement of
goods and
services.
,Some actual topics
What ?
Euromoney, December 2021 – January 2022
What does this show ?
In recent years there has been high inflation.
Who are the people ?
Jerome Powell = President of the Federal Reserve
System.
Andrew Bailey = Governor of the central bank of
England.
Philip Lowe = former Governor of the Central Bank
of Australia
Christine Lagarde = President of the European
Central Bank.
What ?
The Financial Times, December 29 2022.
What does this show ?
The Financial Times made inflation the word of the
year.
, What ?
The Financial Times, November 16 2022.
What does this show ?
Over a long period of time we had very low, even
negative, interest rates.
But over time they increased in order to slow down
inflation.
What ?
The Financial Times, February 2 2024.
What does this show ?
Inflation goes down.
What ?
The Financial Times, February 3 2024.
What does this show ?
US payroll increase.
- The labor market is very healthy because of
the creation of jobs.
BUT this can lead to inflation as well.
