This text integrates the microeconomics of trade with concepts from open economy macroeconomics. The emphasis is on the powerful forces of international competition and the limitations of government policy. Economics began with a political debate over tariffs and the politics continue. Domestic industries lobby for protection against foreign competitors and for export subsidies. Government policy makers favor their pet industries in return for lobby money and votes. Meanwhile, other industries lobby for free trade. Governments worldwide tentatively negotiate free trade agreements while international financial markets determine the effectiveness of their fiscal and monetary policies. Wages, capital returns, and national income rise and fall with international commerce. The text covers these issues of international trade and finance. The trade theory is based on partial equilibrium market analysis, constant cost and neoclassical general equilibrium, the factor proportions model,...
Title: International Economics: Global Markets and Competition
Author: Henry Thompson
Publication Date: 2006