Foundations of International Macroeconomics [Hardcover]

Maurice Obstfeld (Author), Kenneth S. Rogoff (Author)

Book Description

ISBN-10: 0262150476 | ISBN-13: 978-0262150477 | Publication Date: September 12, 1996

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.

Editorial Reviews

Review

"This amazingly comprehensive book provides a lucid explanation of modernmacroeconomic theory and applies the theory to a wide range of internationalissues. For reference and classroom use, it sets a new standard in openeconomy macroeconomics. The use of boxes and applications in anadvanced graduate text such as this is unorthodox, but extremelyeffective." John Campbell, Otto Eckstein Professor of Applied Economics, Harvard University

"This is a landmark treatment of dynamic, open-economy macroeconomics—the only kind of macroeconomics that matters any more." Paul Romer, Graduate School of Business, Stanford University

About the Author

Kenneth Rogoff is Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University and a Research Associate of the National Bureau of Economic Research.

Product Details

• Reading level: Ages 18 and up
  
• Hardcover: 832 pages
• Publisher: The MIT Press (September 12, 1996)
• Language: English
• ISBN-10: 0262150476
• ISBN-13: 978-0262150477
• Product Dimensions: 10.5 x 7 x 1.6 inches
• Shipping Weight: 2.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (6 customer reviews)
• Amazon Best Sellers Rank: #79,107 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

28 of 28 people found the following review helpful:

5.0 out of 5 stars Excellent Textbook, March 8, 2005

By 

Sabad One - See all my reviews

This review is from: Foundations of International Macroeconomics (Hardcover)

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

21 of 21 people found the following review helpful:

5.0 out of 5 stars a must-have for your private library, October 13, 2002

By 

man (earth) - See all my reviews

This review is from: Foundations of International Macroeconomics (Hardcover)

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.

25 of 27 people found the following review helpful:

5.0 out of 5 stars Coherent synthesis of modern open economy macro literature, December 10, 1998

By 

Paul Kitney - University of Sydney (kitney@oz... (Sydney, Australia) - See all my reviews

This review is from: Foundations of International Macroeconomics (Hardcover)

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.