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Part 1 Intertemporal trade and the current account balance: a small two-period endowment economy - application - consumption smoothing in the second millennium BC; the role of investment - nominal versus real current accounts; a two-region world economy - application - war and the current account, application - investment productivity and world real interest rates in the 1980s; taxation of foreign borrowing and lending; international labour movements - application - energy prices, global saving, and real interest rates; stability and the Marshall-Lerner condition. Part 2 Dynamics of small open economies: a small economy with many periods - application - when is a country bankrupt?; dynamics of the current account - Japan's 1923 earthquake; a stochasic current account model - application - Deaton's paradox, application - the relative impact of productivity shocks on investment and the current account; consumer durables and the current account; firms, the labour market and investment; trend productivity growth, saving and investment - a detailed example; speculative asset price bubbles, ponzi games and transversatility conditions. Part 3 The life cycle, tax policy and the current account: government budget policy in the absence of overlapping generations; government budget deficits in an overlapping generations model - generational accounting, application - do government budget deficits cause current account deficits?, application - overlapping generations and econometric tests of the Euler equation; output fluctuations, demographics and the life cycle - application - how are saving and growth related?; investment and growth - application - Feldstein and Horioka's saving-investment puzzle; aggregate and intergenerational gains from trade; public debt and the world interest rate - application - government debt and world interest rates since 1970; integrating the overlapping generations and representative-consumer models; dynamic inefficiency. Part 4 The real exchange rate and the terms of trade: international price levels and the real exchange rate; the price of nontraded goods with mobile capital - empirical evidence on the law of one price - application - sectoral productivity differentials and the relative prices of nontradables in industrial countries, application - productivity growth and real exchange rates; consumption and production in the long run; consumption dynamics, the price level and the real interest rate; the terms of trade in a dynamic Ricardian model - the transfer effect for industrial countries, endogenous labour supply, revisited, costly capital mobility and short-run relative price adjustment. (Part contents).
"There is no real precedent for this original book. The authors have taken a field in which there are often quite different models authors have taken a field in which there are often quite different models that sometimes yield quite disparate results, and have provided a unifying framework for examining the issues. An aspect that I find especially appealing is that the text does not assume much background on the part of students." -- Karen Lewis, The Wharton School, University of Pennsylvania "Since the 1970's, volatile fluctuations in exchange rates, unprecedented trade balance deficits, problems with sovereign debt, and the continued inegration of the world's goods and capital markets have thrust international macroeconomic issues into the spotlight. Ostfeld and Rogoff provide a framework for understanding these issues that is firmly grounded in economic theory and rich in its empirical insights and predictions. Their book will no doubt be the most widely used text for graduate education during the next decade." -- Robert J. Hodrick, Nomura Professor of International Finance, Graduate School of Business, Columbia University "I predict that Foundations of International Macroeconomics will become the most authoritative textbook in the field. Currently I teach a graduate course in international finance at Harvard, and I have not found any text suitable for the course. This book offers basically all I need, and more. I would definitely adopt it not only for a graduate course in international macroeconomics, but for any graduate course in macroeconomics. It is no conincidence that this text is so superb. It has been written by two 'virtuosos' in the field." -- Aaron Tornell, Assistant Professor of Economics, Harvard University "Maury Obstfeld and Ken rogoff are among the very best international macroeconomists working today. They are the perfect people to write the book we badly need -- a comprehensive, lucid treatment of the field that is neither sloppy nor doctrinaire, equipping its readers to understand both the broad areas of agreement among researchers and their important disputes. This book is ideal as a textbook, but it will also be must reading for everyone in the field, no matter how senior. The chapters on sticky-price models, in particular, will I predict revolutionize the terms of the debate. A great achievement." -- Paul Krugman, Ford International Professor of Economics, MIT, and author of The Age of Diminished Expectations "Obstfeld and Rogoff's very fine book confirms their high position as creators and practioners of dynamic international macroeconomics. The book has range, depth, and accessibility. It mixes theory and evidence in admirable proportions." -- Tom Sargent, David Rockefeller, Professor of Economics, University of Chicago, and Senior Fellow, Hoover Institution "A magnificent synthesis of modern macroeconomic theory and international finance. Stunningly coherent, comprehensive and lively. A truly seminal work." -- Mark Gertler, Department of Economics, New York University "Obstfeld and Rogoff's new book is a comprehensive text on modern international macroeconomics, unprecedented in both scope and depth. It will certainly be indispensible for students and researchers in the field." -- Lars E.O. Svensson, Professor of International Economics, Stockholm University This amazingly comprehensive book provides a lucid explanation of modern macroeconomic theory and applies the theory to a wide range of international issues. For reference and classroom use, it sets a new standard in open economy macroeconomics. The use of boxes and applications in an advanced graduate text such as this is unorthodox, but extremely effective. -- 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
Maurice Obstfeld is Class of 1958 Professor of Economics at the University of California, Berkeley. Kenneth Rogoff is Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University.
"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