An ambitious successor to W. Max Corden's highly acclaimed Inflation, Exchange Rates, and the World Economy, this book addresses topics in international macroeconomics that have come to the forefront of economic policy debates in recent years. Covering exchange rate policy, the European Monetary System, protection and competition, and the international "non-system" since the collapse of Bretton Woods, Corden provides a probing analysis of significant economic trends associated with the increasing integration of the world capital market. Beginning with essays on exchange rate policy, the current account, and external effects of fiscal policy, Corden lays out the foundations of balance-of-payments theory in relation to wage rates, income distribution, and inflation. Chapters on the European Monetary System focus on monetary integration and look skeptically at European proposals to move toward monetary union. Other topical essays discuss the "competitiveness" problem and the relation between protection and macroeconomic policy. Corden summarizes and clarifies a vast range of work on the coordination of macroeconomic policies and critically reviews various proposals for reforming the international monetary system.
The previous editions of this work were praised as lucid and insightful introductions to a complicated subject. This third edition incorporates major additions to update the survey while retaining its clarity. Selected from the second edition are essential chapters on developments in balance-of-payments theories, inflation and exchange rates, the international adjustment to the oil price rise, and monetary integration in Europe. In three new chapters, Corden considers the international transmission of economic disturbances, the international macrosystem, and macroeconomic policy coordination.
The second edition of this classic text on international economics includes three completely new chapters on the environment and trade policy, strategic trade policy, and the relationship between trade policy and the exchange rate. The first edition introduced a number of ideas into policy circles; the new edition has been shortened and substantially revised to point up the themes that have subsequently become prominent in discussions of free trade and protection. Trade Policy and Economic Welfare expounds the normative theory of trade policy. It includes discussion of static and dynamic arguments for protection; effects of trade policy on income distribution, monopoly, X-efficieny, foreign investment and capital accumulation; protection of advanced-technology industries; the choice between tariffs and subsidies as methods of protection. The chapters are self-contained to allow flexible use of the book in teaching undergraduate courses on international trade and the economics of developing countries.
Most of the literature on exchange rate regimes has focused on the developed countries. Since the recent crises in emerging markets, however, attention has shifted to the choice of exchange rate regimes for developing countries, especially those that are more integrated into the world capital markets. In Too Sensational, W. Max Corden presents a systematic and accessible overview of the choice of exchange rate regimes. Reviewing many types of regimes, he shows how the choice of an exchange rate regime is related to both fiscal policy and trade policy. Building on the theory of optimum currency areas, Corden develops an analytic framework of three approaches (nominal anchor, real targets, and exchange rate stability) and three polar exchange rate regimes (absolutely fixed, pure floating, and fixed but adjustable). He considers all other regimes to be mixtures of two or three of the polar regimes. Beginning with theory and later turning to case studies of countries in Asia, Europe, and Latin America, Corden focuses on how economies react to negative and positive shocks under various exchange rate regimes. He examines in particular the Asian and Latin American currency crises of the 1990s. He concludes that although "too sensational" crises have discredited fixed but adjustable regimes, the extremes of absolutely fixed regimes or pure floating regimes need not be chosen.
Expounding the normative theory of trade policy, this text sets out a framework for analysing trade and other intervention policies in the presence of domestic distortions.
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