[...]... the usefulness of a book in a constantly evolving area such as international economics, and we have consequently prepared a sixth edition The book covers the standard topics in international economics Each of the two main parts, International Trade and Trade Policy (Part One) and International Finance and Open Economy Macroeconomics (Part Two), develops the theory first, and then applies it to recent... existence Why international economics is a separate field International trade theory and domestic microeconomics both rest on the same assumption that economic agents maximize their own self-interest Nevertheless, there are important differences between domestic and foreign transactions Similarly, international finance is closely tied to domestic macroeconomics, but political borders do matter, and international. .. this edition Finally, we thank users of the first five editions of the book who made useful comments and suggestions Robert M Dunn, Jr George Washington University Washington, DC John H Mutti Grinnell College Grinnell, Iowa July 2003 1 Introduction Learning objectives By the end of this chapter you should be able to understand: • • • • the extent to which international trade in goods and services and international. .. main topics in international economics We have tried to keep the student’s perspective constantly in mind and to make the explanations both intuitively appealing and rigorous Reactions from users of the first five editions – both students and faculty – have been encouraging The passage of time, however, erodes the usefulness of a book in a constantly evolving area such as international economics, and... attention to the position of the least developed countries Chapter 11, which discusses issues of public economics, notes the advance of the Kyoto Protocol to the Climate Change Convention, in spite of US opposition, and the success of the Irish in international tax competition Changes in the discussion of international finance and open economy macroeconomics First, all graphs and tables have been updated... Chapters 1 through 11 provide a compact, self-contained, unit For a one-term course emphasizing international finance and open economy macroeconomics, Chapter 1 and Chapters 12 through 20 are the appropriate choice In writing this book, we have accumulated a number of obligations: to our students and colleagues, and to international economists too numerous to mention whose work is drawn upon in preparing a... Exhibits 12.1 12.2 12.3 12.4 12.5 13.1 13.2 14.1 14.2 14.3 19.1 19.2 20.1 20.2 US balance of payments summary UK balance of payments in the IMF format US international transactions 1993–2001 International investment position of the United States 1994–2001 UK international investment position Exchange rates Real effective exchange rate indices Exchange rates: spot and forward Exchange rate futures Foreign... several decades for the world as a whole; why barriers to the free flow of goods, labor, and capital are central to the study of international trade; why separate currencies and national business cycles are central to the study of international finance; how information about international economic events is available from a variety of sources, including the Internet Although world trade shrank in 2001... Figure 1.1 Trade in goods as a share of GDP in the United Kingdom 1850–1990 Source: B.R Mitchell, International Historical Statistics, Europe 1750–1993, 4th edn, (London, Macmillan Reference Ltd, 1998) 4 International economics Another major aspect of the globalization process has been the explosion of international investment Economists refer to one category of this investment as “foreign direct investment.”... 32.43 119.93 1.26 16.93 47.92 287.68 0.19 1.76 8.23 1.09 0.33 2.53 189.18 Direct investment Source: International Monetary Fund, International Financial Statistics Germany 1971 1980 1990 2000 Japan 1980 1990 2000 US 1970 1980 1990 2000 UK 1970 1980 1990 2000 Direct investment Capital outflows Table 1.2 International capital flows and trade 0.33 2.88 24.82 258.34 2.25 14.15 22.02 474.59 13.22 35.39 47.39 . alt="" International Economics, Sixth Edition The latest edition of International Economics improves and builds upon the popular features of previous editions Mutti is Sydney Meyer Professor of International Economics, Grinnell College, Iowa, USA. International Economics Sixth edition Robert M. Dunn, Jr. George