Abstract
This book attempts to provide a non-mathematical introduction to the macroeconomic analysis of both the open economy and the world economy. Such analysis is appropriate for a number of reasons. First, all economies are, at least to some extent, open; they have trading and financial links with other economies. Second, what holds for a closed economy may not hold for an open one. Dropping the closed economy assumption from simple macroeconomic models is a strategic step which may even reverse the policy conclusions reached. Third, while it is important to see how the operation of an open economy differs from that of a closed one, it is also important to examine the operation of the world economy — or a substantial part of it — as a whole. Many macroeconomic problems are shared across countries and it is therefore relevant to ask whether these problems and their potential solutions should not be dealt with at a more aggregated level than that of individual countries. Furthermore, does it follow that what is right for an individual economy in isolation is right for the world economy?
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Notes and References
Although open-economy macroeconomics is the fashionable title, most traditional textbooks in international economics contain an analysis of similar issues. Open-economy macroeconomics is hardly new.
Views differ about the usefulness of the IS-LM construct. Those who dislike it will tend not to like this book. The justification for using it here is that it provides a fairly simple way of presenting and analysing quite complex problems. Not only that, but, as the case-studies reveal, the model does seem to stand up quite well against observed facts. For the undergraduate anxious to find an analytical framework within which to work, the IS-LM model has much to be said for it. Most introductory textbooks contain an exposition of the IS-LM model and students unfamiliar with it should read the relevant chapters of one of these before proceeding with this book.
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© 1987 Graham Bird
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Bird, G. (1987). Introduction. In: International Macroeconomics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-137-09829-0_1
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DOI: https://doi.org/10.1007/978-1-137-09829-0_1
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-44411-5
Online ISBN: 978-1-137-09829-0
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