Chapter 18. Open Economy Macroeconomics

Link to syllabus

The US Balance of Payments, 2007. Table 18-2, p. 495

Current Account Deficits. p. 499

Egypt’s Balance of Payments, 1991-1998

Source: WTO Trade Policy Review, Egypt, 1999

International Capital Flows. Fig. 18-4, p. 501

Link to x-rate.com

Table 18.3 p. 505 Exchange rates, 2008

Newspaper Presentation

EYE ON THE GLOBAL ECONOMY

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P. 497Bade/Parkin

The Sliding Euro

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P. 485Bade/Parkin

The Dollar and the Yen Since 1980

The Foreign Exchange Market. Fig. 18-5, p. 506.

The market for US Dollars in Europe, for which the price is expressed as €/$.

←D

epre

ciat

ion

of $

A

ppre

ciat

ion

of $

→

The Foreign Exchange Market. Fig. 18-5, p. 506.

The market for US Dollars in Europe, for which the price is expressed as €/$.

←D

epre

ciat

ion

of $

A

ppre

ciat

ion

of $

→

(US imports)

(US exports)

The Foreign Exchange Market. Fig. 18-5, p. 506.

The market for US Dollars in Europe, for which the price is expressed as €/$.

←D

epre

ciat

ion

of $

A

ppre

ciat

ion

of $

→

US imports &capital flows,US → Europe

US exports &capital flows,Europe → US

Increase in Demand for US Dollars in Europe, caused by greater capital flows from Europe → US.

Fig 18-6, p. 507

Political Impact on X-rates

Britain’s new economic policy, Tax and Axe: NYT June 23, 2010

Real vs. Nominal Exchange Rates Peso/US$ 1990-2007. Figure 18-7, p. 509

Purchasing Power Parity, Canada/US. Fig. 18-8, p. 511

US Net Exports, 1947-2008. Fig. 18-9, p. 512

Exchange Rate Intervention. Fig. 18-10, p. 514

Balance of payments deficit: Balance of payments surplusoversupply of domestic currencyin international markets.S reflects Genovian imports,D is Genovian exports, andExports – Imports < 0.

Monetary Policy and the Exchange Rate. Fig. 18-12, p. 519

Note that the exchange rate is now Geno/$, in contrast to Fig. 18-5.

Fig. 18-11 p. 516 The Road to the Euro