Contents Chapter 1 Introduction ..............................................................................................................1 Chapter 2 World Trade: An Overview ......................................................................................3 Chapter 3 Labor Productivity and Comparative Advantage: The Ricardian Model .................7 Chapter 4 Specific Factors and Income Distribution ..............................................................13 Chapter 5 Resources and Trade: The Heckscher-Ohlin Model ..............................................21 Chapter 6 The Standard Trade Model .....................................................................................27 Chapter 7 External Economies of Scale and the International Location of Production ..........33 Chapter 8 Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises ................................................................................39 Chapter 9 The Instruments of Trade Policy ............................................................................45 Chapter 10 The Political Economy of Trade Policy .................................................................53 Chapter 11 Trade Policy in Developing Countries ...................................................................59 Chapter 12 Controversies in Trade Policy ................................................................................63 Chapter 13 (2)* National Income Accounting and the Balance of Payments ..................................69 Chapter 14 (3) Exchange Rates and the Foreign Exchange Market: An Asset Approach .............75 Chapter 15 (4) Money, Interest Rates, and Exchange Rates ..........................................................83 Chapter 16 (5) Price Levels and the Exchange Rate in the Long Run ...........................................91 Chapter 17 (6) Output and the Exchange Rate in the Short Run ....................................................97 Chapter 18 (7) Fixed Exchange Rates and Foreign Exchange Intervention .................................107 Chapter 19 (8) International Monetary Systems: An Historical Overview ..................................117 Chapter 20 (9) Financial Globalization: Opportunity and