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Handbook of International Economics

Book Description

What conclusions can be drawn from recent advances in international trade and international macroeconomics?  New datasets, theoretical models, and empirical studies have resulted in fresh questions about the world trade and payment system.  These chapters--six on trade and six on international macroeconomics--reveal the richness that researchers have uncovered in recent years.  The chapters on foreign trade present, among other subjects, new integrated multisector analytical frameworks, the use of gravity equations for the estimation of trade flows, the role of domestic institutions in shaping comparative advantage, and international trade agreements.  On international macroeconomics, chapters explore the relation between exchange rates and other macroeconomic variables; risk sharing, allocation of capital across countries, and current account dynamics; and sovereign debt and financial crises.  By addressing new issues while enabling deeper and sharper analyses of old issues, this volume makes a significant contribution to our understanding of the global economy.

  • Systematically illuminates and interprets recent developments in research on international trade and international macroeconomics
  • Focuses on newly developing questions and opportunities for future research
  • Presents multiple perspectives on ways to understand the global economy 

Table of Contents

  1. Cover image
  2. Title page
  3. Table of Contents
  4. Copyright
  5. Contributors
  6. Introduction to the Series
  7. Preface
  8. 1: Heterogeneous Firms and Trade
    1. 1 Introduction
    2. 2 Empirical Evidence
    3. 3 General Setup
    4. 4 Closed Economy Equilibrium
    5. 5 Open Economy with Trade Costs
    6. 6 Quantitative Predictions
    7. 7 Factor Abundance and Heterogeneity
    8. 8 Trade and Market Size
    9. 9 Endogenous Firm Productivity
    10. 10 Factor Markets
    11. 11 Conclusion
    12. References
  9. 2: Multinational Firms and the Structure of International Trade
    1. 1 Introduction
    2. 2 Stylized Facts
    3. 3 Benchmark Model: An Extended Krugman (1980) Model
    4. 4 The Proximity-Concentration Hypothesis
    5. 5 Vertical Expansion
    6. 6 MultiCountry Models
    7. 7 Multinational Firm Boundaries
    8. 8 Conclusion
    9. References
  10. 3: Gravity Equations: Workhorse,Toolkit, and Cookbook
    1. 1 Introduction
    2. 2 Micro-Foundations for Gravity Equations
    3. 3 Theory-Consistent Estimation
    4. 4 Gravity Estimates of Policy Impacts
    5. 5 Frontiers of Gravity Research
    6. 6 Directions for Future Research
    7. 7 Conclusion
    8. References
  11. 4: Trade Theory with Numbers: Quantifying the Consequences of Globalization
    1. 1 Introduction
    2. 2 Getting Started
    3. 3 Beyond Armington
    4. 4 Evaluating Trade Policy
    5. 5 Numbers We Can Believe In?
    6. 6 “Micro” versus “Macro” Numbers
    7. 7 Life Without Gravity
    8. 8 Concluding Remarks
    9. References
  12. 5: Domestic Institutions as a Source of Comparative Advantage
    1. 1 Introduction
    2. 2 Contracting and Property-Right Institutions: Impacts on Comparative Advantage
    3. 3 Informal Institutions and their Impacts on Comparative Advantage
    4. 4 Policies and the Indirect Impacts of Institutions on Comparative Advantage
    5. 5 The Impact of Trade and Comparative Advantage on Domestic Institutions
    6. 6 Conclusion
    7. References
  13. 6: International Trade Agreements
    1. 1 Introduction
    2. 2 The Motives for Trade Agreements
    3. 3 The Design of Trade Agreements
    4. 4 Regional Trade Agreements
    5. 5 Conclusion
    6. References
  14. 7: International Prices and Exchange Rates
    1. 1 Introduction
    2. 2 Empirical Evidence
    3. 3 A Simple Framework to Interpret Empirical Findings
    4. 4 Models with Desired Variable Markups
    5. 5 Other Models of Incomplete Pass-through
    6. 6 Industry Equilibrium
    7. 7 General Equilibrium
    8. 8 Conclusion
    9. 9 Appendix
    10. References
  15. 8: Exchange Rates and Interest Parity
    1. 1 Exchange Rates and Interest Parity
    2. 2 Monetary Sticky-Price Models of Exchange Rates
    3. 3 Empirical Studies of Exchange Rates
    4. 4 Ex Ante Excess Returns and the Uncovered Interest Parity Puzzle
    5. 5 Conclusions
    6. References
  16. 9: Assessing International Efficiency
    1. 1 Introduction
    2. 2 A Methodology for Assessing International Efficiency
    3. 3 Assessing Long-Run Efficiency
    4. 4 Assessing Efficiency in International Business Cycles
    5. 5 Conclusion
    6. 6 Appendix: Proof of Proposition 1
    7. References
  17. 10: External Adjustment, Global Imbalances, Valuation Effects
    1. 1 Introduction
    2. 2 Stylized Facts
    3. 3 Long-Term Capital Flows in the Neoclassical Growth Model
    4. 4 Models of Global Imbalances
    5. 5 External Balance Sheets, Valuation Effects, and Adjustment
    6. 6 The International Monetary and Financial System
    7. 7 Conclusion
    8. References
  18. 11: Sovereign Debt
    1. 1 Introduction: Conceptual Issues
    2. 2 Empirical Facts
    3. 3 A Benchmark Framework
    4. 4 Richer Notions of “Default”
    5. 5 Self-fulfilling Debt Crises
    6. 6 Incomplete-Market Models and their Quantitative Implementation
    7. 7 Concluding Remarks
    8. References
  19. 12: International Financial Crises
    1. 1 Introduction
    2. 2 Fiscal-Monetary Imbalances
    3. 3 Overvaluation, Unemployment, and Multiple Equilibria
    4. 4 Financial Flows, Sudden Stops, and Balance Sheet Effects
    5. 5 Spread Spirals and Rollover Crises
    6. 6 Sources of Fragility
    7. 7 Concluding Remarks
    8. References
  20. Index