Foundations of International Macroeconomics

Book Description

Foundations of International Macroeconomics is an innovative text that offers the first integrative modern treatment of the core issues in open economy macroeconomics and finance. With its clear and accessible style, it is suitable for first-year graduate macroeconomics courses as well as graduate courses in international macroeconomics and finance. Each chapter incorporates an extensive and eclectic array of empirical evidence. For the beginning student, these examples provide motivation and aid in understanding the practical value of the economic models developed. For advanced researchers, they highlight key insights and conundrums in the field.

Topic coverage includes intertemporal consumption and investment theory, government spending and budget deficits, finance theory and asset pricing, the implications of (and problems inherent in) international capital market integration, growth, inflation and seignorage, policy credibility, real and nominal exchange rate determination, and many interesting special topics such as speculative attacks, target exchange rate zones, and parallels between immigration and capital mobility.

Most main results are derived both for the small country and world economy cases. The first seven chapters cover models of the real economy, while the final three chapters incorporate the economy's monetary side, including an innovative approach to bridging the usual chasm between real and monetary models.

Customer Reviews:

Hmm. Decent.......2005-10-18

I laughed, I cried. Of course this is just an macro econ book for grad students for open econ. Builds up very gradual. But could have been written better. Don't expect any climatic love story for Autarky rates. But I enjoyed Romer's Macroecon book more, because it includes more case studies on certain theories. Since you will be reading this book for a grad class, you really have no choice, you got to buy this book, if you want to pass the prelims.

Excellent Textbook.......2005-03-08

International economics is not my field, even if I do find it interesting. As a graduate student, I liked this book a lot. It is not brilliantly written, and it is at times rather dull reading. BUT it a VERY clear and modern treatment of an important subject by two of the best scholars in the field. Overall, it's a very "user-friendly" graduate textbook. Not very entertaining, but it allows you to go through the material (much of it rather advanced) without too much pain, and without many leaps of faith (or pages of algebra) to go from one equation to the next. And there are many well developed applications which will help you see how the theory relates to the real world. There are many exercises to test your (or your students') knowledge of the field, whose solutions are also separately available.

Being this a graduate textbook, reading it requires a strong technical background, so if you are simply looking for a book to deepen your knowledge of a subject that you may only know through op-ed pieces, you should probably look elsewhere (e.g. undergraduate textbooks such as Krugman and Obstfeld). But if you are looking for an advanced but approachable and modern treatment of international macro, this book would be a very good bet. Highly recommended.

Here are some details about the book:

The chapters

1 Intertemporal Trade and the Current Account Balance
2 Dynamics of Small Open Economies
3 The Life Cycle, Tax Policy, and the Current Account
4 The Real Exchange Rate and the Terms of Trade
5 Uncertainty and International Financial Markets
6 Imperfections in International Capital Markets
7 Global Linkages and Economic Growth
8 Money and Exchange Rates under Flexible Prices
9 Nominal Price Rigidities: Empirical Facts and Basic Open-Economy Models
10 Sticky-Price Models of Output, the Exchange Rate, and the Current Account

Some examples of the applications

- Energy Prices, Global Saving, and Real Interest Rates
- The Relative Impact of Productivity Shocks on Investment and the Current Account
- Do Government Budget Deficits Cause Current Account Deficits?
- Feldstein and Horioka's Saving-Investment Puzzle
- Government Debt and World Interest Rates Since 1970
- Sectoral Productivity Differentials and the Relative Prices of Nontradables in Industrial Countries
- Productivity Growth and Real Exchange Rates
- International Portfolio Diversification and the Home Bias Puzzle
- How Large Are the Gains from International Risk Sharing?
- How Costly Is Exclusion from World Insurance Markets?
- How Have Prior Defaults Affected Countries Borrowing Terms?
- Can Capital Deepening Be an Engine of Sustained High Growth Rates: Evidence from Fast-Growing East Asia
- Population Size and Growth
- Testing for Speculative Bubbles
- Central Bank Independence and Inflation
- Openness and Inflation

Appendix

- Methods of Intertemporal Optimization
- A Model with Intertemporally Nonadditive Preferences
- Solving Systems of Linear Difference Equations
- Multiperiod Portfolio Selection
- Continuous-Time Maximization and the Maximum Principle

a must-have for your private library.......2002-10-13

Currently I'm using this book for my class called Trade and Economic Growth I II. The nuances of microeconomic foundations found in chapters 1 to 5 are used to explain and develop the concepts studied in open economy macroeconomics and international finance; so it is recommended that you understand fully the first three chapters of this book at least to understand the rest. The authors try to explain the concepts as clear as possible; however, you have to derive for yourself the equations that appear in the text, which is a challenge for most first year graduate students who are not yet proficient in using the tools of static/dynamic optimization, etc. A reference on mathematical economics such as Chiang's "Fundamental methods of math. econ.," and "Elements of dynamic optimization," or Simon Blume's "Mathematics for economists" should be kept near at hand. Nevertheless, there are many real-world examples that help clarify matters and make the this book more readable and interesting.

Coherent synthesis of modern open economy macro literature.......1998-12-10

The authors recognized the problems with the way that the subject of open economy macroeconomics has been taught in graduate programs in the past. In particular, there was little agreement and no definitive text that tied together any unified theme. Eclectic reading lists, mainly from the 1960's and the 1970's, were provided on each subject area with major changes in analysis required to shift from one area to another. The counter argument from others in the field was that the modern literature lacked policy relevance. The authors' retort by claiming that the "classic approach" lacks internal consistency and the micro foundations required. Moreover, the older approach has been criticized for failing to deal with dynamics clearly and does not address many of the policy issues that are relevant today. With the exception of two chapters on money the text builds up from a single analytical framework to display several of the key results in international macroeconomics and growth. A rigorous approach based on the micro foundations of macroeconomics is used throughout the text. While this approach may be criticized for putting forward only a Neoclassical method, the authors have made an effort to include models of imperfections and some material based on Keynesian underpinnings. The text gives a current appreciation of the state of the literature in the field and as such is an excellent reference tool. The authors' vigilance in updating the material in the text via the web site is particularly appealing as it keeps it contemporary. For the targeted consumer: the graduate student (like myself) and certainly the academic, the level of sophistication is not prohibitive.

Foundations of Macroeconomics plus MyEconLab plus eBook 1-semester Student Access Kit (3rd Edition) (MyEconLab Series)

Average customer rating:

This is a softcover book
Did receive what was described
Excellent for Self-Study (Distance Learning) Courses
Fair - Not a stand-alone textbook

Foundations of Macroeconomics plus MyEconLab plus eBook 1-semester Student Access Kit (3rd Edition) (MyEconLab Series)
Robin Bade , and Michael Parkin
Manufacturer: Addison Wesley
ProductGroup: Book
Binding: Paperback

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ASIN: 0321412729

Customer Reviews:

This is a softcover book.......2006-09-08

I was thinking about giving this a 2 star rating because they sent to me a softcover book instead of hardcover as described. However, Amazon's representative was very friendly and supportive so I decide to keep the item and give it a 4 star rating.

Did receive what was described.......2005-10-03

The description of the book stated that this title was the paperback version, which is what I needed. Instead I received a hard cover version that feels like toting a bowling ball!

Excellent for Self-Study (Distance Learning) Courses.......2003-11-24

I used this book for a distance learning course in the principles of macroeconomics (Econ 101) and it is by far the best introductory text in macroeconomics I have encountered. Bade and Parkin explain the theory and concepts very clearly and constantly use examples of a typical consumer or company to illustrate these concepts even though they are describing a macroeconomy. For those of you who have taken Principles of Microeconomics before Macro, this is a HUGE PLUS, and for those of you who are taking Macro before Micro, you will not feel a sense of disconnect when you begin microecon after this class. The authors do a fine job integrating areas of micro and macroecon and not make the two feel incompatible. What's more, they do not leave out crucial explanations to graphs, figures and equations so those who do not have a strong background in mathematics need not be intimidated. The graphs,figures and equations indeed supplement the narrative and sufficient examples are given so you can master the quantitative aspects of the course. Just don't take short cuts and do read the entire chapter and concepts will sink in like you wouldn't believe. This is the 3rd time in my life I have attempted a study of macroeconomics and my efforts have previously been held back because of texts that were too complex or theoretical. I am now pulling a strong A and this is because the text does a good job of lowering the entry barrier to learning economics without sacrificing academic rigor.

Fair - Not a stand-alone textbook.......2003-11-08

This textbook contained a lot of technical information but offered little connection to real-life macroeconomics. I love economics and feel that it is necessary to emphasize its everyday uses in order to motivate a student's learning.

Book Description

New classical economics makes three assumptions to explain economic phenomena. Firstly, people solve their decision problems by following the prescriptions of the expected utility theory. Secondly, people behave like econometricians in learning the structure of the environment and predicting economic events. And thirdly, the general forms of the laws of economics are the same in case of the individual and the economy. This book challenges these hypotheses, explaining why the expected utility theory, even if it were true, fails to be of much help in solving economic controversies. It goes on to demonstrate why there can be no theory of statistical learning and why therefore the proposal that homo economicus behaves like a statistician falls a long way short of helping us understand the dynamics of the economy. Finally the book brings to the fore the complexities that behavioural heterogeneity and interaction create for the connection between the micro and macro levels in the economy. These complexities lend strong support to atheoretical macroeconomics.

The Foundations of Modern Macroeconomics

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Aonther best book on Advanced Macroeconomics
The best so far!
Stick to the Tulips
an excellent book

The Foundations of Modern Macroeconomics
Ben J. Heijdra , and Frederick van der Ploeg
Manufacturer: Oxford University Press, USA
ProductGroup: Book
Binding: Paperback

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ASIN: 0198776179

Book Description

Advanced macroeconomics can seem a daunting prospect. Complex and poorly defined, infected with a variety of conflicting approaches, it is difficult for the student to get an overall picture of what there is and how it fits in. Foundations of Modern Macroeconomics is aimed at getting round this fundamental problem: it deals with all the major topics, summarizes the important approaches, and gives students a coherent angle on all aspects of macroeconomic thought. Each chapter deals with a separate area of macroeconomics, and each contains a summary section of key points and a further reading list, enabling the student to check what has been learnt and investigate further in other books.

Customer Reviews:

Aonther best book on Advanced Macroeconomics.......2006-02-19

Comprehensive and comprehensible. The book covers a wide range of topics. See the contents of book. Students equipped with (ordinary and partial) differential calculus and matrix skills should be able to access the materials with comfort. All equations are followed by clear exposition in words. Instead of Blanchard and Fischer's Lectures on Macroeconomics, Foundations of Modern Macroeconomics is another best reference that should be kept by every serious graduate student.

The best so far!.......2005-08-13

Of several available graduate texts in macroeconomics in the market, this is the best so far. While D. Romer (2001) is too naive (technically and expositionally), Ljungqvist & Sargent (2004) is too advanced (BTW, T. Sargent (1987) and Blanchard & Fischer (1989) are too old). Heijdra & Ploeg (2002) is just the right book at the right level; it's extremely well-written and technically sophisticated!

Stick to the Tulips.......2004-01-16

This is not a good text book. The troubles start on the back cover where the face of Ricky "Tricky" Van Der Ploeg stares at me. The exposition is cluttered and there is an obsession with the word intermezzo throughout.

an excellent book.......2002-12-28

While I was teaching a graduate level core macroeconomics course, I found that reference books are very limited. These include Blanchard & Fischer's book, Barro & Sala-i-Martin's book and Obstfeld & Rogoff's book. After I found a copy of this book, I immediately realized this book is very well written, and should be added to the above list. By reading this book, one can not only learn many insightful points and advanced technics, but also can have a good survey of literatrue in many areas. I suggest that anyone in the field of macroeconomics buy a copy (by the way, I believe David Romer's book is very badly written,I think Romer himself is technically weak).

Foundations for a Disequilibrium Theory of the Business Cycle: Qualitative Analysis and Quantitative Assessment

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Foundations for a Disequilibrium Theory of the Business Cycle: Qualitative Analysis and Quantitative Assessment
Carl Chiarella , Peter Flaschel , and Reiner Franke
Manufacturer: Cambridge University Press
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Binding: Hardcover

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ASIN: 0521850258

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In a non-market-clearing approach to business cycle theory, this book builds an advanced model of economic activity, inflation and income distribution in a Keynesian spirit. After a qualitative analysis of the basic feedback mechanisms, the authors calibrate the model to the stylized facts of the business cycle in the U.S. economy. This calibrated model is used to carry out various macroeconomic simulation studies as well as a detailed study of the macroeconomic impact of various monetary policy rules. It will appeal both to theorists and to applied and policy economists.

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Foundations of Macroeconomics

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ASIN: 0321197712

Market-Augmenting Government: The Institutional Foundations for Prosperity (Economics, Cognition, and Society)

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Market-Augmenting Government: The Institutional Foundations for Prosperity (Economics, Cognition, and Society)

Manufacturer: University of Michigan Press
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Binding: Paperback

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ASIN: 0472068172

Book Description

As recently as 1990 policymakers and academics believed widely that all that was needed for dramatic increases in prosperity in transitional economies was to roll back the state. The arguments in this book present an articulate antidote to that assertion: While the state must withdraw from many activities involving direct production and exchange, it must provide good laws and enforce them for economies to prosper. In one chapter, Robert Summers brilliantly exposes the complexity of this requirement, listing eighteen minimum conditions for the creation of the rule of law. Other chapters describe the benefits of good commercial law on economic growth, the political foundations of American commercial law, how poor governance led to the Asian financial crisis, the institutional requirements for environmental markets, and constitutional structures that lead to efficient government.

The contributors, renowned experts in their fields on the complex institutional requirements for prosperity, offer arguments from economic theory, economic history, legal theory, and political science. The chapters are simultaneously of high scholarly quality and intensely applicable. Indeed many of the ideas here are being used to design reform projects in developing countries.

Market-Augmenting Government will appeal to legal theorists, economists, and political scientists, and in particular to institutional economists. Its writing is friendly to the general reader, with only a few of the chapters requiring specialized knowledge. The book will also figure importantly in policy circles as governance moves center stage in the practice of reform and development.

Omar Azfar is Research Associate, IRIS Center, University of Maryland, College Park. Charles A. Cadwell is Director and Principle Investigator, IRIS Center, University of Maryland, College Park.

America Unequal (Russell Sage Foundation Books at Harvard University Press)

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America Unequal (Russell Sage Foundation Books at Harvard University Press)
Sheldon H. Danziger , and Peter Gottschalk
Manufacturer: Harvard University Press
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Binding: Hardcover

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ASIN: 0674018109

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America Unequal demonstrates how powerful economic forces have diminished the prospects of millions of Americans and why "a rising tide no longer lifts all boats." Changes in the economy, public policies, and family structure have contributed to slow growth in family incomes and rising economic inequality. Poverty remains high because of an erosion of employment opportunities for less-skilled workers, not because of an erosion of the work ethic; because of a failure of government to do more for the poor and the middle class, not because of social programs.

There is nothing about a market economy, the authors say, that ensures that a rising standard of living will reduce inequality. If a new technology, such as computerization, leads firms to hire more managers and fewer typists, then the wages of lower-paid secretaries will decline and the wages of more affluent managers will increase. Such technological changes as well as other economic changes, particularly the globalization of markets, have had precisely this effect on the distribution of income in the United States.

America Unequal challenges the view, emphasized in the Republicans' "Contract with America," that restraining government social spending and cutting welfare should be our top domestic priorities. Instead, it proposes a set of policies that would reduce poverty by supplementing the earnings of low-wage workers and increasing the employment prospects of the jobless. Such demand-side policies, Sheldon Danziger and Peter Gottschalk argue, are essential for correcting a labor market that has been increasingly unable to absorb less-skilled and less-experienced workers.

The Power to Tax: Analytic Foundations of a Fiscal Constitution

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Analytical framework to help understand taxpayers' revolt

The Power to Tax: Analytic Foundations of a Fiscal Constitution
Geoffrey Brennan , and James M. Buchanan
Manufacturer: Cambridge University Press
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The Calculus of Consent: Logical Foundations of Constitutional Democracy (Tullock, Gordon. Selections. V. 2.)

ASIN: 0521027926

Book Description

Should government’s power to tax be limited? The events of the late 1970s in the wake of California’s Proposition 13 brought this question very sharply into popular focus. Whether the power to tax should be restricted, and if so how, are issues of immediate policy significance. Providing a serious analysis of these issues, the authors offer an approach to the understanding and evaluation of the fiscal system, one that yields profound implications. Fiscal arrangements are analysed in terms of the preferences of citizen-taxpayers who are permitted at some constitutional level of choice to select the fiscal institutions to which they themselves are to be subject over an uncertain future. The central question becomes: How much ‘power to tax’ would the citizen voluntarily grant to government as a party to some initial social contract devising a fiscal constitution? Those in office are assumed to exploit the power assigned to them to the maximum possible extent: government is modelled as ‘revenue-maximizing Leviathan’. Armed with such a model, the authors proceed to trace out the restrictions on the power to tax that might be expected to emerge from the citizen’s constitutional deliberations.

Customer Reviews:

Analytical framework to help understand taxpayers' revolt.......2005-03-14

Geoffrey Brennan and James M. Buchanan's The Power to Tax provides an analytical framework for understanding the so-called taxpayers' revolt of the late 1970s, when taxpayers began using referendums to enact amendments to state constitutions in order to limit taxation and hold down public spending by state legislatures. The book combines the orthodox public-finance approach with the public-choice approach to normative tax analysis. Government does not really fit the description of benevolent despot that is implicit in orthodox public-finance theory, nor can the taxpayers' revolt be explained by the median-voter model of public-choice theory. Instead, citizen-taxpayers saw government as a budget-maximizing Leviathan-like bureaucracy, whose behavior can analytically be described by the monopoly model of mainstream economics.

Traditional public-finance based normative tax analysis advises governments how to maximize revenues, or how to pluck the goose in order to obtain the most feathers with the least amount of hissing. It comes up with criteria of what it sees as efficiency and equity, such as comprehensiveness of the tax base and progression in the rate structure. Brennan & Buchanan instead adopt a different perspective: maximization of tax revenues may be in the interest of government (or, more precisely, of politicians and bureaucrats), but not of the citizen-taxpayer. The authors therefore come up with constitutional tax rules intended to constrain Leviathan. These rules are pretty much the opposite of those derived by orthodox public-finance theory, namely a non-comprehensive tax base and uniformity of tax rates (e.g. a proportional, or flat, tax).

The reason why tax limitations are to be enacted at the constitutional level is that tax limitation proposals did not emerge from the normal electorate process. Mere electoral constraints proved inadequate in limiting government to the level desired by the citizen-taxpayer. Furthermore, tax limitations are designed specifically to prevent government from taking those actions that citizens-taxpayers believe government would have taken, in spite of existing electoral constraints, in the absence of tax limitations.

In a nutshell, the book is about tax-base and tax-rate constraints. Conventional norms of tax analysis call for comprehensiveness and progression. But if you want to hold down the size of government, you do not favor comprehensiveness, and you favor uniformity of the tax rate. In short, if you want small government, you favor a flat tax with lots of deductions.

Critics of the book have charged that government is not at all times akin to a revenue-maximizing Leviathan. But, although this may be true, constraining rules such as tax limitations may serve as a "worst-case" check intended to prevent government from becoming that. This point of clarification became the basis of the authors' subsequent collaboration, The Reason of Rules, which is vol. 10 in the Buchanan Collected Works series.

The essence of The Power to Tax is also presented in two papers by the authors contained in volume 14 of Buchanan's Collected Works. I recommend that volume instead, since The Power to Tax does not really add much new insight to the analysis in those two papers.

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