International Economics

Dominick Salvatore is the Distinguished Professor of Economics and the Director of the Ph.D. Program in Economics at Fordham University in New York City. He is the Honorary Professor at the Shanghai Finance University and Hunan University and was a Visiting Professor at various universities including University of Rome, American University in Cairo, University of Pretoria, Peking University, University of Trieste, and University of Vienna. Dr. Salvatore is a Fellow of the New York Academy of Sciences and past Chairman of its Economics Section. He is also the past president of the North American Economic and Finance Association and the International Trade and Finance Association. He is a Consultant to the United Nations, the World Bank, the International Monetary Fund, the Economic Policy Institute, and several major international corporations and global banks. He is the co-editor of the Journal of Policy Modeling and the Open Economies Review, the Associate Editor of The American Economist and Frontiers in Finance and Economics, and the past Editor of the Handbook Series in Economics, Greenwood Press. He has given more than 500 lectures around the world, was awarded the Achievement Award by the City of University of New York in 1997, and was nominated for the 2010 National Medal of Science awarded by the President of the United States.

1 Introduction 1

PART 1 INTERNATIONAL TRADE THEORY

2 The Law of Comparative Advantage 29

3 The Standard Theory of International Trade 53

4 Demand and Supply, Offer Curves, and the Terms of Trade 79

5 Factor Endowments and the Heckscher–Ohlin Theory 101

6 Economies of Scale, Imperfect Competition, and International Trade 141

7 Economic Growth and International Trade 169

PART 2 INTERNATIONAL TRADE POLICY

8 Trade Restrictions: Tariffs 197

9 Nontariff Trade Barriers and the New Protectionism 227

10 Economic Integration: Customs Unions and Free Trade Areas 263

11 International Trade and Economic Development 287

12 International Resource Movements and Multinational Corporations 317

PART 3 THE BALANCE OF PAYMENTS, FOREIGN EXCHANGE MARKETS, AND EXCHANGE RATES

13 Balance of Payments 345

14 Foreign Exchange Markets and Exchange Rates 365

15 Exchange Rate Determination 401

PART 4 OPEN-ECONOMY MACROECONOMICS AND THE INTERNATIONAL MONETARY SYSTEM

16 The Price Adjustment Mechanism with Flexible and Fixed Exchange Rates 437

17 The Income Adjustment Mechanism and Synthesis of Automatic Adjustments 465

18 Open Economy Macroeconomics: Adjustment Policies 493

19 Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply 531

20 Flexible versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination 555

21 The International Monetary System: Past, Present, and Future 589

Answers to Selected Problems On Web

Glossary of Key Terms 623

Name Index 637

Subject Index 641

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