CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-1

Index

Absolute advantage Basel Agreement, 433, 519 footloose inputs, 137–139 Basket peg, 560 tax effects, 140–141 Bates, R. H., 209n Abowd, J. M. , 154n Baumol, W. J., 110n, 148 Accommodating transactions, 285–286 Bayoumi, T., 565n Adelman, M. A., 208n “Beggar thy neighbor” policies, 331, 537 Adjustable peg, 561 Beladi, H., 131n Advance deposits on imports, 332 Bergsten, C. F., 269, 303 Bergstrand, J., 364n trade pattern, 8 Bernanke, B., 568 trade restrictions, 228–229, 231 Bhagwati, J., 53, 70n, 193n, 201, 222, 244, 265n Aircraft market, 216–218 Bilson, J., 612n Allen, H., 608n Black, B., 616n Al Marhubi, F., 569 Blackman, S. A. B., 148 American Depository Receipts, 492 Blanchard, O., 565n Announcements, economic statistics, 599–601 Blonigen, B. A., 238n Antidumping policies Bogetik, Z., 370n consequences, 237–238 Bolivia, 403, 490 procedure, 236–237 Borjas, G. J., 166 Appreciation, emerging-market currencies, Boughton, J., 466n 494, 496 Bovard, J., 197n Arbitrage, 22, 360, 415, 442 Bown, C. P., 238n Argentina, 435, 490, 561 Box diagram ARIMA forecasting model, 608–609 consumption, 31–32, 185 Artis, M., 252n, 269, 421n production, 118–119 ASEAN group, 137, 261 Bradford, C. I., 262n, 264n Assignment problem, 350–352, 465–466 Brady Plan, 491 Auquier, A. A., 211n Brainard, S. L., 161n Australia, 86, 155, 391, 392 Brander, J. M., 214n, 225n Branson, W., 598, 616n Backus, D., 546n Brazil, 209, 219, 435, 490, 551, 558 Balance sheet effect, 512 Brock, W.A., 191n, 201 Balassa, B., 364 Bryant, R., 531n Baldwin, R., 215n Buchanan, J., 193n Baldwin, R. E., 113n, 195n, 196n Budget constraint, 14–16 Bananas, trade in, 232 Buffer stocks, 209 Barro, R., 441, 550, 617n Buiter, W., 477n

I-1 CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-2

I-2 Index

Bulgaria, 355 Cline, W. R., 113n, 117, 522 Burmeister, M. E., 256n Collins, S., 558n Colombia, 494 Cagan, P., 369, 582n Commodity agreements, international, 208–209 Cain, G. G., 113n Common Fund, 209 Cairncross, A. K., 155n Common market, defined, 247 Calvo, G., 491n, 517n, 522, 569 Canada financial assets, 445 capital mobility, 155, 451 Heckscher-Ohlin model, 102–103 export tax, 175 longevity of, 109 floating exchange rate, 368 pollution abatement, 265 gains from Agreement, 255 production model, 25-27 inflation targeting, 559 specific factors model, 86–87 intellectual property rights, 209 Compensation, 28 pollution, 265 Composite traded commodity, 73–74 real interest rate, 591 Conditionality (IMF), 507-510 Canada-U.S. Free , 255 Contagion, 504–506 Canzoneri, M., 565n Cooper, R. N., 380n, 487, 513 Capital controls, Corbo, V., 391n, 514n developing country crises, 515–518 Corden, W. M., 90n, 190n, 201, 336n, 408 liberalization, 419 Corn Laws, 86 operation, 419–420 Corsetti, G., 504n possible legitimate aims, 515–516 Counterfeit goods, 219–220 Capital mobility, Countervailing duties, 236 fixed exchange rates, 450–452, 478–480 Covered interest arbitrage, 428–431, 574 monetary policy, 452–454 Crawling peg, 560 Capital stock, international, 156–157 Crony , 503–504 Caribbean Basin Initiative, 256 Crowding out, 445, 471–474 Caves, R. E., 158n, 166, 211n Currency boards, 356, 561 Ceglowski, J., 68 Currency mismatch, 512 Central American Free Trade Agreement, 256 Currency union, 561 Chang, K., 261n , defined, 247 Chang, R., 502n Chile, 403, 497, 513, 590 Davutyan, N., 372n China Deardorff, A. V., 191n, 232n, 242n access to entrepreneurial resources, 260–261 Debt neutrality, 441–442 , 495–496 De Gregorio, G., 364n counterfeit goods, 219–220 DeLong, B., 522 exports, 4–5, 239 De Melo, J., 391n foreign direct investment, 434, 495 Denmark, 482, 586 growth, 109 Derivatives, 432 regionalized development, 260–261 Destler, I. M., 244 trade disputes, 240 Devaluation , 68, 110 contractionary effect, 510–513 Clausing, K., 256n effect over time, 382–384 CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-3

Index I-3

monetary contraction alternative, 509–510 Elasticity pessimism, 297–298 nontraded goods, 405–406 Engel, C., 368n, 601n, 610n real balance effect, 387–389 Enright, M. J., 261n de Vanssay, 191n Environmental quality. See Pollution Developing countries Escape clause, 236 export-led growth, 260–262 Estonia, 355 import substitution, 261–263 Estrin, S., 260n international borrowing, 156–157 Euro, 417 technology adaptation, 162 Euromarkets, 412–414 trade agreements, 231 European Economic and Monetary Union, trade structure, 5–6 308, 417, 481 Diamond, D., 502n European Exchange Rate Mechanism, 368, Diaz-Alejandro, C., 504n, 511 482, 500, 501, 586 Diminishing returns, 79–80 European Monetary System, 421–423, 452, Disintermediation, 434n 481, 558 Doha Round, 231 Dollar, D., 110n, 264n accession, transition economies, 258 Dollarization, 561 income distribution, 28 Dominguez, K., 622 industrial policy, 217–218 Dooley, M., 504n nontariff barriers, 238, 254 Dornbusch, R., 37, 399n, 400n, 404n, 408, 513n optimum currency area, 564–567 542, 582n, 588, 595, 605 trade creation, diversion, 252 Dragutinovic, D., 370n trade disputes, 232, 240 Dumping Exchange rates policy toward, 236–238 demand supply determinants, 291–293 steel industry, 205–206 disturbance transmission, 529–530 theory of, 215–216 expectations, 580–582 Durability, specific factors, 109 monetary determinants, 576–577 Dutch disease, 88–90, 141, 196, 402–404 nominal anchor, 557–559 Dybvig, P.,502n portfolio balance effects on, 616–617 Exchange risk premium, 612–613 East Germany, absorption, 528 Export tax, 175 Econometric models, 530–538 External balance , defined, 247 capital mobility, 459–461 Economies in transition devaluation, 333–337, 339–340 central planning’s legacy, 257–258 fiscal policy, 455 comparative advantage, 258–259 monetary policy, 339, 452–453 International Monetary Fund programs, 508 nontraded goods, 401–404 trade with centrally planned economies, zones of imbalance, 461–464 257–258 trade with Western Europe, 5–6, 258 -Price Equalization Theorem, 99, Edelstein, M., 155n 104, 151 Edwards, S., 426n, 440, 514, 517n, 522, 569 Fair price, 191 Effective exchange rate, 291 Falvey, R., 130n Eichengreen, B., 377, 380n, 488, 522, 565n, 569 Fama, E., 612n CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-4

I-4 Index

Feenstra, R. C., 5n, 244 defined, 247 Feldstein, M. S., 442, 522 U.S.-Canada-Mexico, 255–256 Fieleke, N., 432n Frenkel, J., 371n, 377n, 440, 485n, 582n Financial Accounting Standards Board, 614 Friedman, M., 427n, 605 Financial crises, 433, 435–436 Froot, K., 591n, 607n, 612n, 623 Financial integration, 435–536 Funabashi, Y., 541 Financial repression, 424 Furman, J., 509n Financial Stability Forum, 518 Fiscal policy Gains from trade capital mobility, 450–452 domestic monopoly, 203–205 econometric estimates, 531–539 exchange model, 20–21 external balance, 333–335, 338–340, 455, factor mobility, 151, 153 457–459, 468–470, 478–480 production model, 22–24 internal balance, 333–334, 335–336, 338–340, Ricardian model, 61–62 455, 468–470, 478, 484 Garber, P.,500n multiplier effect, 327–329 General Agreement on Tariffs and Trade, indexation 553 231–232 Fischer, S., 541, 552 Geography, economic, 112 Flan, H., 215n Germany, 43–44, 67, 156, 389, 445, 481, 501 Fleming, J. M., 488 Giavazzi, F., 558n Floating exchange rates Giddy, I., 432n capital mobility, 482–485 Gilbert, C. L., 209n, 222 countries’ experience, 367–368 Giovannini, A. 364n 1930s experience, 29 Girton, L., 457n, 577n transmission of disturbances, 328–330 Global Depository Receipts, 492 Flood, R., 500n , 4, 6, 69, 242 Footloose activities , 355, 378–382, 556–557 absolute and comparative advantage, Goldstein, A. E., 223, 523 137–139 Goldstein, M., 324, 440 Newly Industrializing Countries, 136–137 Golub, S. 68 Foreign currency options, 432 Gould, D. M., 166 Foreign exchange futures, 431 Goodhart, C., 419n Forward exchange market, 427–428, 610–612 Gourinchas, P.O., 620n Foreign exchange market Graham, E. M., 158n, 166 bid-ask spreads, 415 Graham, F., 77 size, 413 Gravity model, 246–247 two-tier, 332–333 Greenspan, A., 473n, 491 vehicle currencies, 416–417 Gresser, E., 196n Forward rate bias, 610-612 Grieco, P.L. E., 264n Foreign Sales Corporations, 232 Griffin, J. M., 208n, 223 France, 43, 156, 421, 452, 481, 482, 501, 558 Grilli, E. R., 136n Frankel, J.A., 246n, 252n, 269, 431n, 488, 496n, Grilli, V., 565n 522, 539n, 567n, 569, 591n, 601n, 605, 607n, Grossman, G. M., 194n 612n, 622 Group of Seven (G-7), 503, 506, 507, Freeman, R. B., 113n, 154n 520, 535 Free trade areas Group of 20, 518 CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-5

Index I-5

Growth, economic Inflation comparative advantage changes, 109–110 cost of, 555 immiserizing, 42–43 policy coordination, 554–558 openness, linked to, 263–264 reasons for, 554–555 specific factors model, 84–85 targeting, 559 protection and welfare, 197–199 United States, 459–460 terms of trade, 42–43 Innovation, financial, 426–427 Guidotti rule, 498n Intellectual property rights, 218–220, 231 Interest equalization tax, 412 Hamilton, C., 233 Interest rate defense, 501 Harberger, A. C., 348n Internal balance Harduvelis, G., 601n devaluation, 335–336 Harris, R. G., 255n fiscal policy, 334–335, 455, 478–480 Heckscher, E., 95, 117 monetary policy, 478–480 Heckscher-Ohlin Theorem, 110–112, 137, 156 nontraded goods, 461–466 funds, 492, 519 zones of imbalance, 461–464 Henderson, D., 457n, 618n International Monetary and Financial Helpman, E., 117, 132, 194n Committee, 518 Hodrick, R., 610n International Monetary Fund, 500, 503, Holzman, F. D., 257n 506–509, 518, 520 Honeymoon effect, 586 Intertemporal optimization, 273, 436-439, 441 Hong Kong, 109, 137, 140, 261, 320, 355, 493, Intertemporal trade 505, 561 goods, 48–50 Hooper, P.,324 capital, 436–439 Horioka, C., 442n Intra-industry trade Houthakker, H. S., 320n defined, 47 Hufbauer, G. C., 264n, 269 prevalence, 122–123 Hughes, K., 260n Investment income, 276 Hungary, 370 , 368, 558 Hume, D., 356 Irwin, D., 201, 244 Hyperinflation, 369–372, 582 Isard, P., 592n Israel, 490, 551 Immiserizing growth, 42–43 Italy, 421, 481, 482, 551, 558 Impossible trinity, 481-482 Ito, T., 270 Income distribution Heckscher-Ohlin model, 99, 103–104 Japan production model, 27–28 capital controls, 420 specific factors model, 80–83 exchange rate and foreign investment, 299 Income-consumption curve, 183–184 exchange rate variability, 365 Income effect, 33–34, 45–46 finished goods imports, 135 Increasing Cost, Law of, 18–19 food import restrictions, 86 Indexation, wages, 551–554 liquidity trap, 341 India, 109 monetary policy, 377 Indifference curves, 16–17 real balance effect, 389 Indonesia, 109, 261, 391426, 494, 505, 512 saving rate, 157, 438 Infant industry protection, 262 J-curve, 298–300, 471 CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-6

I-6 Index

Johnson, H. G., 153, 199, 202, 346, 357, 377 Liberalization Jones, R. W., 53, 89n, 93, 114n, 117, 118, 131n, domestic financial markets, 424 142, 148, 149, 152n, 214n international capital flows, 419–420 optimal order, 423–424 Kaminsky, G., 496n trade in financial services, 424–425 Katrak, H., 214n Licensing, technology, 162 Katz, L., 565n Lincoln, E. J., 135n Kehoe, P.,546n Lipsey, R. E., 361n Kennedy Round, 230 Liquidity trap, 341 Keynes, J. M., 44–45, 380n Liquidity versus solvency, 507 Khan, M., 324 Lithuania, 355 Kierzkowski, H., 130n, 142, 149 Litterman, R., 532 Klein, L., 532 Lizondo, S., 496n, 523 Konnings, J., 238n Lloyd, P., 132 Korea, 67, 109, 137, 140, 261, 494, 503, Locomotive theory, 316–317 505, 512 Interbank Offered Rate, 413 Kose, M. A., 440 Lothian, J., 366n Kouri, P., 616n Lowinger, T. C., 259n Kravis, I., 361n Lucas, R., 550, 576n Kreinen, M. E., 230n, 252, 320 Lyons, R., 416n Krueger, A. O., 8n, 193n, 202, 232n, 244, 256n, 267n, 270 Maastrict Treaty, 254, 481 Krugman, P., 77, 112n, 132, 158n, 166, 202, MacDonald, R., 609n, 623 213n, 223, 346, 418n, 492n, 500, 504n, Magee, S. P.,191n, 201, 320n 513n, 586n, 602n Malaysia, 109, 261, 505 Kuhn, P., 154n Managed floating, 285–286 Kuwait, 135 Marginal propensity to import, 44, Kydlund, F., 546n 307, 343 Marin, D., 280n Labor theory of value, 60 Marjit, S., 131n Lal, A. K., 259n Mark, N., 609n Laursen, S., 348n Markusen, J. R., 152 Laursen-Metzler-Harberger effect, 347, Marquez, J., 324 529–530 Marshall-Lerner condition, 296–297, 299 Lavergne, R. P.,195n , 44, 293 Law of one price, 360 Maskus, K. E., 111n, 219n, 223 Lawrence, R. Z., 223 Mayer, W., 93, 109n, 191n Leamer, E. E., 111, 117 McCallum, J., 227n Lee, H.-H., 132 McGuire, S. M., 223 Lee, J.W., 242n McKibbin, W., 531 Lee, N., 252n, 269 McKinnon, R., 424n, 425n, 563n Leiderman, L., 491n, 522 Meade, J., 316n, 333n Lender of last resort, 507 Meese, R., 609 Leontief, W.W., 111 Metzler, L., 348n Lewes, K., 623 Meadows, D. H., 136n CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-7

Index I-7

Mexico, 239, 255–256, 265, 490, 497, 498, 500, Ricardian model, 68–69 512, 513, 558 Multifiber Arrangement Migration proliferation, 238–239 gains from, 153 welfare consequences, 239–240 guest workers, 153 Multinational enterprise income distribution, 153–154 affinity for R&D, 160 U.S. inflow, 153–154 bases for, 158–160 Miller, M., 477n developing countries, 160–161 Minford, P., 531 exchange rates’ influence, 161 Monetary base, 354 international distribution, 159 Monetary policy intra-industry foreign direct investment, anchor, nominal, 556–559 160 econometric estimates, 531–535 merchandise trade, 161–162 external balance, 339–340, 474–475, 478, 484 spillover benefits, 163 internal balance, 474–475, 478, 484 tariff inducement, 161, 199 internal balance, 347–349 technology transfer, 162 optimum currency areas, 562–563 welfare effects 162–163 real exchange rate, 590–592 Multiplier, open economy, 312–314 trade balance, 384–387 Mundell, R., 333n, 357, 377, 389n, 458n, 461, Money demand, 384–386, 530 488, 527n, 563n Money supply. See also Monetary policy Murrell, P., 259n announcements, 599–601 Mussa, M., 109n, 303, 368n, 440, 619n balance of payments, 354–355, 357–358 Mutti, J., 223 expectation patterns, 585–588 international reserves, 382–384 Natural resources nominal anchor, 556–559 terms of trade, 135–136 Monopolistic competition U.S. trade structure, 134–135 conditions for, 125 Nam, C. H., 263n firm’s equilibrium, 126 National Savings Identity, 310 market equilibrium, 127 Neary, J. P.,90n welfare significance, 128–129 Netherlands, 402 Monopoly, domestic Newly Industrialized Countries, curbed by trade exposure, 203–205 261–262, 320 international dumping, 205–206 Ng, F., 143 Monopoly, international Noland, M., 261n exploitation of, 210–213, 223–225 Nontariff trade barriers, incidence, resistance to, 213–215, 218 233 Montiel, P., 523 Nontraded goods Moral hazard, 492, 503, 518 devaluation, 396–398, 405–406 Moran, T. H., 166 Dutch disease, 402–404 Multicommodity trade expenditure disturbances, 393–395 Heckscher-Ohlin model, 106–108 internal balance, 398–400 production model, 47 money supply, 401–402, 404–405 Multicountry trade Ricardian model, 72–73 production model, 47–48 specific factors model, 90 CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-8

I-8 Index

North American Free Trade Agreement Pesetti, P., 504n confounding events, 255 Petith, H. C., 251n environment issues, 176 Petrovic, P.,370n evidence on performance, 256 Pippinger, J., 372n Mexico’s spending boom, 491 Philippines, 261 public choice, 196–197 Policy coordination Nugent, J. B., 250n international practice, 535–536 Nziramasanga, M., 259n obstacles, 538–539 theoretical gains, 536–538 Obstfeld, M., 350n, 501n Pollution Offer curve, 34–35, 182–185 international spillovers, 176, 265–266 Official reserve transactions, 275, 277, 279 tradable rights, 176–177 Ohlin, B., 45, 117 trade policy, 176–177, 242 Oil prices. See also Organization of Petroleum Pomfret, R., 270 Exporting Countries Porter, M. E., 112n cartel determined, 207–208 Portfolio capital income distribution, 29–30 nineteenth century, 155–156 supply shock, 547 recent patterns, 157 Optimal tariff, 177–178, 182–183, 251 Portugal, 482, 558 Optimum currency area Posen, A., 346, 569 criteria, 562–563 Prasad, E., 440 European Union, 564–567 Preferential trading arrangements German monetary union, 560–561 distribution of gains, 250–251 Organization of Petroleum Exporting reorganization of industries, 253–254 Countries understated gains, 253–254 cartel operation, 207–208 versus multilateral, 266–267 international lending, 44, 157, 413 welfare gain or loss, 250 unilateral transfers, 314 Price-specie-flow mechanism, 356 Original sin, 512 Primary product prices O’Rourke, K. H., 166 trends, 136 Ostry, S., 244 variability, 135, 155 Oudiz, G., 539n, 541 Product differentiation, 123–124, 246 Production-possibilities schedule. See advanced-country wages, 144–146 Transformation curve defined, 133 Productivity shocks, 69–70 determinants, 142–144 Profit conditions, competitive, 65 production model, 48 Prusa, T. J., 238 Outward-looking growth, 110 Public choice Overseas outsourcing, 276, 425 conservative social welfare function, 194 Overshooting, 588–590 lobbying model, 193 pollution controls, 265–266 Pagano, M., 558n special groups’ rivalry, 196–197 Park, J. H., 238n special protection, 241–242 Parsons, D. O., 206n voting model, 193 Patrick, H. T., 222, 244 Pugel, T.A., 206n CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-9

Index I-9

Purchasing power parity Sargent, T., 550 defined, 359 Sarno, L., 623 deviations, extent of, 360–361, 365–369 Satiation, debt holdings, 619–620 deviations, reasons for, 361–365 Saudi Arabia, 134 hyperinflation, 369–372 Savings retention coefficient, 442 monetary model exchange rate, 575–576 Scale economies nontraded goods, 362–364 multinational enterprises, 161 outsourcing, 142–143 Quantitative restrictions, 234, 332 Schott, J. J., 232n, 244, 269 Quasi-fiscal deficit, 494 Schulze, C., 223 Scott, E. E., 261n Radelet, S., 523 Securitization, 433–435 Radford, R. A., 22 Seigniorage, 418, 555 Ray, E. J., 196n, 206n Shaw, E. S., 424n Razin, A., 350n, 485n Sims, C., 532 Real balance effect, 373–374, 387–389, 511 Singapore, 109, 137, 261, 320 Real Business Cycle models, 359, 546 Singh, J., 163n Real interest parity, 579n Sinn, Hans-Werner, 564n Regional agglomeration, 112 Smoot-Hawley Act, 227, 229, 331 Regressive expectations, 590 Sovereign spreads, 505-506 Reinhart, C., 491n, 496n, 517n, 522 Spain, 481, 558 Remittances, emigrants’, 276, 278 Special Drawing Rights, 277, 381, 417 Reserves, international Speculation money supply, 382–384 bubbles, 585–586 Revey, P.,614n devaluation, 512 Rey, H., 620n foreign exchange market, 418 Ricardo, D., 59, 77 prisoner’s dilemma game, 501–502 Rigid technology, 96–99 stabilizing, 601–603 Robinson, S., 256n Speculative attacks Rockett, K., 539n conditions for, 499–504 Rogoff, K., 440, 538n, 569, 609 contagion, 504–506 Romalis, J., 256n Spencer, B. J., 214n, 225n Romer, D., 562n Srinavasan, T. N., 265n Roper, D., 577n Stability Rose, A., 496n, 560n, 567n barter exchange, 53–55 Roubini, N., 504n financial crises, 501–502 Ruffin, R., 114n foreign exchange market, 295–297, Russia, 39, 46, 403, 435, 505–506, 508, 558 303–305 Stability and Growth Pact, 566n Sachs, J., 263, 531, 537n, 539n, 541, 554, Steel industry, 205–206 565n, 566n Stein, E., 246n Sala-i-martin, X., 565n Sterilization, 354–356, 494, 498–499, 617 Salter, W. E. G., 395n Stern, R. M., 111n Samuelson, P., 35, 70n, 77, 104, 118, 202, Stiglitz, J., 509n 364n, 598 Stockman, A., 366n CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-10

I-10 Index

Stolper, W. F., 104n, 118, 202 Technical change Stolper-Samuelson Theorem, 104–105, 191 commodity trade pattern, 71–72 Subsidies, industrial, 217–218 single traded good, 74 Substitution effect, 32–34, 45–46 Teece, D. J., 223 Sudden stops, 517 Terms of trade Sugar trade, 240–241 economic growth, 42–43 Summers, L., 552n exchange model, 14–16 Supply relationships tariff effect, 40–42 aggregate, 549–551 temporary shifts, 348–349 Friedman-Phelps, 548–550 transfer process, 44–46 Lucas-Sargent-Barro, 550–551 Thailand, 140, 261, 505, 512 modified Keynesian, 546–648 Thaler, R., 623 frictionless neoclassical, 545–546 Thierfelder, K., 256n Sveikauskas, L., 111n Tobin, J., 602n Svensson, L., 350n, 559n Todd, S., 260n Swagel, P., 242n Tokyo Round, 230 Swan, T., 336n, 400n Tollison, R., 193n Sweden, 40, 156, 482, 501, 547 Tourism, 7 Switzerland, 547 Trade creation, 247–248 Swoboda, A., 461, 542 Trade diversion, 248–249 Transfer process, capital Taiwan, 109, 110, 137, 261, 320, 505 real resources, 46–47 Target zone, exchange rate, 560, 586n nineteenth century pattern, 155–156 Tariffs unilateral transfers, 43–45, 314–315 demand effect, 172–174 Transformation curve foreign direct investment, 199 Heckscher-Ohlin model, 102 growth and welfare, 197–199 production model, 16–20 imports effect, 174 Ricardian model, 60–61 income distribution, 40–41 rigid technology, 97–98 multilateral reduction, 229–231 specific factors model, 80–81, 93–94 production effect, 171–172 Transition economies. See Economies in reciprocal liberalization, 229–231, transition 232–233 Transportation costs, 5, 108, 246–247, revenue effect, 187–188 278, 361 second-best instrument, 189–192 Trefler, D. C., 111, 112, 113 terms of trade, 40–42 Triffin, R., 381 unemployment, 200 Tullock, G., 193n Taxes Turkey, 193a, 435 capital flows, 423–424 turnover taxes, 423–424 Unemployment Taylor, A., 368n tariffs, 200 Taylor, J., 532 transitional, 77–78 Taylor, L., 513n Unilateral transfers, 276-277, Taylor, M., 366n, 421n, 605, 608n, 609n, 623 314-315 CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-11

Index I-11

United Kingdom Viner, J., 247 capital controls, 421 Volcker, P.,473n capital exports, 154–156, 452 Voluntary export restrictions, 234–236 emigration, 154–156 inflation targeting, 559 Wage determinants liberalization, 411 indexation, 514, 551–554 monetary policy, 477, 501, 528 international differences, 66–67 , 90 Ricardian model, 65–66 United States specific factors model, 81–82 agriculture exports, 86 Wang, Z. K., 258n, 270 balance of payments accounts, 286 Wanniski, J., 378 capital controls, 412–413 Warner, A., 263 capital mobility, 451–452 Wei, S.-J., 246n, 440 current account balance, 319–332, 381 Wells, L. T., 161n dollar’s currency-market status, 417–418 , durum, 197 exchange rate, 298 Willett, T., 542, 569 financial regulation, 424 Williamson, J., 356n, 511n, 586n foreign debt, 620 Williamson, J. G., 166 government deficits, 441–442, 470–471 Winters, L. A., 258n, 270 monetary policy, 476–477 Wolf, H., 364n natural resources, 134–135 Wolff, E. J., 110n, 148 real balance effect, 389 Wooton, I., 154n real interest rates, 592 World Bank, 520 saving, 310 , 188, 218, 231 sugar policy, 240–241 Wright, G., 134, 166 tariff structure, 195–196 Wriston, W., 146n trade structure, 5–7 Wyplosz, C., 488, 566n wages, 67 Unit-value isoquants, 105–106 Xiong, W., 208n Unskilled labor. See also Wage determination causes of wage decline, 112–114 Yanchus, 191n migration, 154 Yang, M. C., 136n specific factors model, 88 Yeats, A., 143 tariff protection, 196 Yeung, B., 223 Uruguay Round, 230–231, 234, 236, 332 Yotopoulos, P.A., 250n Young, A., 141 Valuation effect, 283n, 620 Yugoslavia, 370 Vandenbussche, H., 238n Vanek, J., 134n Zecker, J. R., 379n Variety, taste for, 133–135 Vegh, C., 569 Velasco, A., 502n Verdier, D., 194n Vertical differentiation, 130–131 CAVE.idx.v2.sts 6/6/06 5:09 PM Page I-12