Instructor’s Resource Manual (Download
Only) for International Economics:
Theory and Policy
Revised by
Hisham Foad & Mike Casey
International Economics:
Theory and Policy
Twelfth Edition
Paul R. Krugman
Maurice Obstfeld
Marc J. Melitz
ISBN-10: 0135767040
ISBN-13: 9780135767047
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, Table of 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 ..............................................................14
Chapter 5 Resources and Trade: The Heckscher-Ohlin Model ..............................................23
Chapter 6 The Standard Trade Model .....................................................................................31
Chapter 7 External Economies of Scale and the International Location of Production ..........40
Chapter 8 Firms in the Global Economy: Export and Foreign Sourcing Decisions
and Multinational Enterprises ................................................................................46
Chapter 9 The Instruments of Trade Policy ............................................................................55
Chapter 10 The Political Economy of Trade Policy .................................................................64
Chapter 11 Trade Policy in Developing Countries ...................................................................73
Chapter 12 Controversies in Trade Policy ................................................................................77
Chapter 13 National Income Accounting and the Balance of Payments ..................................84
Chapter 14 Exchange Rates and the Foreign Exchange Market: An Asset Approach .............93
Chapter 15 Money, Interest Rates, and Exchange Rates ........................................................105
Chapter 16 Price Levels and the Exchange Rate in the Long Run .........................................114
Chapter 17 Output and the Exchange Rate in the Short Run ..................................................123
Chapter 18 Fixed Exchange Rates and Foreign Exchange Intervention .................................135
Chapter 19 International Monetary Systems: A Historical Overview ....................................146
Chapter 20 Financial Globalization: Opportunity and Crisis ..................................................157
Chapter 21 Optimum Currency Areas and the Euro ...............................................................166
Chapter 22 Developing Countries: Growth, Crisis, and Reform ............................................176
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,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
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, 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 as exemplified
by both Brexit and the recent U.S. presidential campaign. The text material will enable students to
understand the economic context in which such events occur.
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.
Chapter 2
World Trade: An Overview
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Only) for International Economics:
Theory and Policy
Revised by
Hisham Foad & Mike Casey
International Economics:
Theory and Policy
Twelfth Edition
Paul R. Krugman
Maurice Obstfeld
Marc J. Melitz
ISBN-10: 0135767040
ISBN-13: 9780135767047
Downloaded by: akramrq12 | Want to earn $1.236
Distribution of this document is illegal extra per year?
, Table of 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 ..............................................................14
Chapter 5 Resources and Trade: The Heckscher-Ohlin Model ..............................................23
Chapter 6 The Standard Trade Model .....................................................................................31
Chapter 7 External Economies of Scale and the International Location of Production ..........40
Chapter 8 Firms in the Global Economy: Export and Foreign Sourcing Decisions
and Multinational Enterprises ................................................................................46
Chapter 9 The Instruments of Trade Policy ............................................................................55
Chapter 10 The Political Economy of Trade Policy .................................................................64
Chapter 11 Trade Policy in Developing Countries ...................................................................73
Chapter 12 Controversies in Trade Policy ................................................................................77
Chapter 13 National Income Accounting and the Balance of Payments ..................................84
Chapter 14 Exchange Rates and the Foreign Exchange Market: An Asset Approach .............93
Chapter 15 Money, Interest Rates, and Exchange Rates ........................................................105
Chapter 16 Price Levels and the Exchange Rate in the Long Run .........................................114
Chapter 17 Output and the Exchange Rate in the Short Run ..................................................123
Chapter 18 Fixed Exchange Rates and Foreign Exchange Intervention .................................135
Chapter 19 International Monetary Systems: A Historical Overview ....................................146
Chapter 20 Financial Globalization: Opportunity and Crisis ..................................................157
Chapter 21 Optimum Currency Areas and the Euro ...............................................................166
Chapter 22 Developing Countries: Growth, Crisis, and Reform ............................................176
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,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
Downloaded by: akramrq12 | Want to earn $1.236
Distribution of this document is illegal extra per year?
, 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 as exemplified
by both Brexit and the recent U.S. presidential campaign. The text material will enable students to
understand the economic context in which such events occur.
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.
Chapter 2
World Trade: An Overview
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