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To our parents
Brief Contents
PART 1 Introduction to International
Economics
Chapter 1 The Global Economy 1
PART 2 Patterns of International Trade
Chapter 2 Trade and Technology: The Ricardian
Model 29
Chapter 3 Gains and Losses from Trade in the
Specific-Factors Model 61
Chapter 4 Trade and Resources: The
Heckscher-Ohlin Model 89
Chapter 5 Movement of Labor and Capital
between Countries 125
PART 3 New Explanations for International
Trade
Chapter 6 Increasing Returns to Scale and
Monopolistic Competition 167
PART 4 International Trade Policies
Chapter 7 Import Tariffs and Quotas Under
Perfect Competition 199
Chapter 8 Import Tariffs and Quotas Under
Imperfect Competition 245
Chapter 9 International Agreements: Trade,
Labor, and the Environment 293
PART 5 Exchange Rates
Chapter 10 Introduction to Exchange Rates and
the Foreign Exchange Market 337
Chapter 11 Exchange Rates I: The Monetary
Approach in the Long Run 375
Chapter 12 Exchange Rates II: The Asset
Approach in the Short Run 423
PART 6 The Balance of Payments
Chapter 13 National and International Accounts:
Income, Wealth, and the Balance of
Payments 469
Chapter 14 Output, Exchange Rates, and
Macroeconomic Policies in the
Short Run 511
PART 7 Applications and Policy Issues
Chapter 15 Fixed Versus Floating: International
Monetary Experience 563
Chapter 16 The Euro 605
Index I-1
vii �
Contents

Preface xxii

PART 1 CHAPTER 1 The Global Economy 1

Introduction to
1 International Trade 2
International
The Basics of World Trade 4
Economics
HEADLINES Sum of iPhone Parts: Trade Distortion 5
Map of World Trade 6
Trade Compared with GDP 8
Barriers to Trade 9
APPLICATION Tariffs in the Interwar Period 9

2 Migration and Foreign Direct Investment 10

Map of Migration 10
Map of Foreign Direct Investment 12

3 International Macroeconomics 14
Foreign Exchange: Currencies and Crises 14
HEADLINES Economic Crisis in Iceland 16
Globalization of Finance: Debts and Deficits 17
Government and Institutions: Policies and Performance 20

4 Conclusions 23

PART 2 CHAPTER 2 Trade and Technology: The Ricardian Model 29

Patterns of
International Trade 1 Reasons for Trade 31
Proximity 31
Resources 32
Absolute Advantage 32
SIDE BAR Can Comparative Advantage Be Created? The Case
of “Icewine” 33
Comparative Advantage 34
SIDE BAR David Ricardo and Mercantilism 34

2 Ricardian Model 35
The Home Country 35
The Foreign Country 39

� viii
 CONTENTS ix

APPLICATION Comparative Advantage in Apparel, Textiles, and

Wheat 40

3 Determining the Pattern of International Trade 42

International Trade Equilibrium 43
APPLICATION Labor Productivity and Wages 48

4 Solving for International Prices 49

Home Export Supply Curve 49
International Trade Equilibrium 53
APPLICATION The Terms of Trade for Primary Commodities 54

5 Conclusions 55
Key Points, Key Terms, and Problems

CHAPTER 3 Gains and Losses from Trade in the Specific-Factors

Model 61
1 Specific-Factors Model 63
The Home Country 63
The Foreign Country 66
Overall Gains from Trade 66
APPLICATION How Large Are the Gains from Trade? 67

2 Earnings of Labor 68
Determination of Wages 68
Change in Relative Price of Manufactures 70
APPLICATION Manufacturing and Services in the United States:
Employment and Wages across Sectors 73
APPLICATION Trade Adjustment Assistance Programs: Financing the
Adjustment Costs of Trade 75

3 Earnings of Capital and Land 76

Determining the Payments to Capital and Land 76
HEADLINES Services Workers Are Now Eligible for Trade
Adjustment Assistance 77
Numerical Example 79
What It All Means 82
APPLICATION Prices in Agriculture 82

4 Conclusions 84
HEADLINES Rise in Coffee Prices—Great for Farmers,
Tough on Co-ops 85
Key Points, Key Terms, and Problems
x CONTENTS

CHAPTER 4 Trade and Resources: The Heckscher-Ohlin

Model 89
1 Heckscher-Ohlin Model 90
Assumptions of the Heckscher-Ohlin Model 91
APPLICATION Are Factor Intensities the Same Across Countries? 93
No-Trade Equilibrium 94
Free-Trade Equilibrium 96

2 Testing the Heckscher-Ohlin Model 100

Leontief’s Paradox 101
Factor Endowments in 2010 102
Differing Productivities across Countries 104
HEADLINES China Drawing High-Tech Research from
U.S. 107
Leontief’s Paradox Once Again 109

3 Effects of Trade on Factor Prices 112

Effect of Trade on the Wage and Rental of Home 112
Determination of the Real Wage and Real Rental 115
Changes in the Real Wage and Rental: A Numerical Example 117
APPLICATION Opinions toward Free Trade 119

4 Conclusions 121
Key Points, Key Terms, and Problems

CHAPTER 5 Movement of Labor and Capital Between

Countries 125
1 Movement of Labor between Countries: Migration 127
Effects of Immigration in the Short Run: Specific-Factors
Model 127
APPLICATION Immigration to the New World 130
APPLICATION Immigration to the United States and Europe
Today 131
HEADLINES Call for Return of Border Controls in Europe 132
HEADLINES The Economic Windfall of Immigration
Reform 133
Other Effects of Immigration in the Short Run 135
Effects of Immigration in the Long Run 136
Rybczynski Theorem 141
Factor Price Insensitivity Theorem 142
APPLICATION The Effects of the Mariel Boat Lift on Industry
Output in Miami 142
APPLICATION Immigration and U.S. Wages, 1990–2006 144
 CONTENTS xi

2 Movement of Capital between Countries: Foreign Direct

Investment 146
Greenfield Investment 147
FDI in the Short Run: Specific-Factors Model 147
FDI in the Long Run 149
APPLICATION The Effect of FDI on Rentals and Wages in
Singapore 151

3 Gains from Labor and Capital Flows 153

HEADLINES The Myth of Asia’s Miracle 153
Gains from Immigration 154
SIDE BAR Immigrants and Their Remittances 157
APPLICATION Gains from Migration 158
Gains from Foreign Direct Investment 161

4 Conclusions 162
Key Points, Key Terms, and Problems

CHAPTER 6 Increasing Returns to Scale and Monopolistic PART 3 

Competition 167 New Explanations
for International
1 Basics of Imperfect Competition 170
Trade
Monopoly Equilibrium 170
Demand with Duopoly 171

2 Trade Under Monopolistic Competition 172

Equilibrium without Trade 174
Equilibrium with Free Trade 176

3 The North American Free Trade Agreement 180

Gains and Adjustment Costs for Canada Under NAFTA 180
HEADLINES The Long and the Short of the Canada-U.S. Free
Trade Agreement 181
Gains and Adjustment Costs for Mexico Under NAFTA 181
HEADLINES NAFTA Turns 15, Bravo! 182
HEADLINES Nearly 20 Years After NAFTA, First Mexican Truck
Arrives In U.S. Interior 183
Gains and Adjustment Costs for the United States Under NAFTA 186

4 Intra-Industry Trade and the Gravity Equation 189

Index of Intra-Industry Trade 190
The Gravity Equation 191
APPLICATION The Gravity Equation for Canada and the United
States 192

5 Conclusions 195
Key Points, Key Terms, and Problems
xii CONTENTS

­­­­PART 4 CHAPTER 7 Import Tariffs and Quotas Under Perfect

International Trade Competition 199
Policies
1 A Brief History of the World Trade Organization 201

2 The Gains from Trade 202

Consumer and Producer Surplus 202
SIDE BAR Key Provisions of the GATT 203
Home Welfare 205
Home Import Demand Curve 207

3 Import Tariffs for a Small Country 208

Free Trade for a Small Country 208
Effect of the Tariff 208
Why and How Are Tariffs Applied? 212
SIDE BAR Safeguard Tariffs 213
APPLICATION U.S. Tariffs on Steel and Tires 214

4 Import Tariffs for a Large Country 222

Foreign Export Supply 222
Effect of the Tariff 223
APPLICATION U.S. Tariffs on Steel Once Again 227

5 Import Quotas 229

Import Quota in a Small Country 229
HEADLINES Banana Wars 231
HEADLINES Sugar Could Sweeten U.S. Australia Trans-Pacific
Trade Talks 232
APPLICATION China and the Multifibre Arrangement 235

6 Conclusions 238
Key Points, Key Terms, and Problems

CHAPTER 8 Import Tariffs and Quotas Under Imperfect

Competition 245
1 Tariffs and Quotas with Home Monopoly 247
No-Trade Equilibrium 248
Free-Trade Equilibrium 249
Effect of a Home Tariff 250
Effect of a Home Quota 252
APPLICATION U.S. Imports of Japanese Automobiles 254
 CONTENTS xiii

2 Tariffs with Foreign Monopoly 257

Foreign Monopoly 257
APPLICATION Import Tariffs on Japanese Trucks 259
HEADLINES The Chickens Have Come Home to Roost 261

3 Dumping 262
Numerical Example of Dumping 264

4 Policy Response to Dumping 264

Antidumping Duties 265
APPLICATION United States Imports of Solar Panels from
China 265
APPLICATION Antidumping Duties Versus Safeguard Tariffs 268

5 Infant Industry Protection 270

Free-Trade Equilibrium 272
Tariff Equilibrium 272
APPLICATION Examples of Infant Industry Protection 274
Government Policies in the Solar Panel Industry 274
U.S. Tariff on Heavyweight Motorcycles 276
HEADLINES Solar Flares 276
Computers in Brazil 280
Protecting the Automobile Industry in China 282
HEADLINES Milestone for China Car Output 282
HEADLINES Shanghai Tie-Up Drives Profits for GM 284

6 Conclusions 286
Key Points, Key Terms, and Problems

CHAPTER 9 I nternational Agreements: Trade, Labor,

and the Environment 293
1 International Trade Agreements 296
The Logic of Multilateral Trade Agreements 296
Regional Trade Agreements 299
Trade Creation and Trade Diversion 301
Numerical Example of Trade Creation and Diversion 301
HEADLINES China-ASEAN Treaty Threatens Indian
Exporters 302
Trade Diversion in a Graph 303
APPLICATION Trade Creation and Diversion for Canada 306
xiv CONTENTS

2 International Agreements on Labor Issues 306

Labor Side Agreement Under NAFTA 307
Other Labor Agreements 308
HEADLINES Wal-Mart Orders Chinese Suppliers to Lift
Standards 310
HEADLINES American Tariffs, Bangladeshi Deaths 312
HEADLINES U.S. Suspends Bangladesh’s Preferential Trade
Status 313

3 International Agreements on the Environment 314

Environmental Issues in the GATT and WTO 314
Does Trade Help or Harm the Environment? 317
Examples of the Environmental Impact of Trade 320
The Tragedy of the Commons 322
International Agreements on Pollution 326
APPLICATION The Kyoto Protocol and the Copenhagen Accord 328

4 Conclusions 330
HEADLINES Dismal Outcome at Copenhagen Fiasco 361
Key Points, Key Terms, and Problems

PART 5 CHAPTER 10 Introduction to Exchange Rates and the Foreign

Exchange Rates Exchange Market 337
1 Exchange Rate Essentials 338
Defining the Exchange Rate 338
Appreciations and Depreciations 340
Multilateral Exchange Rates 342
Example: Using Exchange Rates to Compare Prices in a Common
Currency 343

2 Exchange Rates in Practice 345

Exchange Rate Regimes: Fixed Versus Floating 345
APPLICATION Recent Exchange Rate Experiences 346

3 The Market for Foreign Exchange 351

The Spot Contract 351
Transaction Costs 352
Derivatives 352
APPLICATION Foreign Exchange Derivatives 353
Private Actors 354
Government Actions 354
 CONTENTS xv

4 Arbitrage and Spot Exchange Rates 355

Arbitrage with Two Currencies 356
Arbitrage with Three Currencies 357
Cross Rates and Vehicle Currencies 358

5 Arbitrage and Interest Rates 359

Riskless Arbitrage: Covered Interest Parity 359
APPLICATION Evidence on Covered Interest Parity 361
Risky Arbitrage: Uncovered Interest Parity 362
SIDE BAR Assets and Their Attributes 363
APPLICATION Evidence on Uncovered Interest Parity 365
Uncovered Interest Parity: A Useful Approximation 366
Summary 368

6 Conclusions 368
Key Points, Key Terms, and Problems

CHAPTER 11 Exchange Rates I: The Monetary Approach in

the Long Run 375
1 Exchange Rates and Prices in the Long Run: Purchasing Power
Parity and Goods Market Equilibrium 376
The Law of One Price 377
Purchasing Power Parity 378
The Real Exchange Rate 379
Absolute PPP and the Real Exchange Rate 379
Absolute PPP, Prices, and the Nominal Exchange Rate 380
Relative PPP, Inflation, and Exchange Rate Depreciation 380
Summary 382
APPLICATION Evidence for PPP in the Long Run and
Short Run 382
How Slow Is Convergence to PPP? 383
What Explains Deviations from PPP? 384
SIDE BAR Forecasting When the Real Exchange Rate Is
Undervalued or Overvalued 385
HEADLINES The Big Mac Index 386

2 Money, Prices, and Exchange Rates in the Long Run: Money

Market Equilibrium in a Simple Model 388
What Is Money? 388
The Measurement of Money 388
The Supply of Money 389
xvi CONTENTS

The Demand for Money: A Simple Model 390

Equilibrium in the Money Market 391
A Simple Monetary Model of Prices 391
A Simple Monetary Model of the Exchange Rate 392
Money Growth, Inflation, and Depreciation 393

3 The Monetary Approach: Implications and Evidence 394

Exchange Rate Forecasts Using the Simple Model 394
APPLICATION Evidence for the Monetary Approach 397
APPLICATION Hyperinflations 398
SIDE BAR Currency Reform 399

4 Money, Interest Rates, and Prices in the Long Run:

A General Model 401
HEADLINES The First Hyperinflation of the Twenty-First
Century 402
The Demand for Money: The General Model 402
Long-Run Equilibrium in the Money Market 403
Inflation and Interest Rates in the Long Run 404
The Fisher Effect 405
Real Interest Parity 406
APPLICATION Evidence on the Fisher Effect 407
The Fundamental Equation Under the General Model 408
Exchange Rate Forecasts Using the General Model 409

5 Monetary Regimes and Exchange Rate Regimes 411

The Long Run: The Nominal Anchor 412
APPLICATION Nominal Anchors in Theory and Practice 414

6 Conclusions 416
Key Points, Key Terms, and Problems

CHAPTER 12 Exchange Rates II: The Asset Approach in the

Short Run 423
1 Exchange Rates and Interest Rates in the Short Run:
UIP and FX Market Equilibrium 424
Risky Arbitrage 424
Equilibrium in the FX Market: An Example 426
Adjustment to Forex Market Equilibrium 427
Changes in Domestic and Foreign Returns and FX Market Equilibrium 428
Summary 430

2 Interest Rates in the Short Run: Money Market Equilibrium 430

Money Market Equilibrium in the Short Run: How Nominal Interest Rates
Are Determined 430
 CONTENTS xvii

Money Market Equilibrium in the Short Run: Graphical Solution 432

Adjustment to Money Market Equilibrium in the Short Run 432
Another Building Block: Short-Run Money Market Equilibrium 433
Changes in Money Supply and the Nominal Interest Rate 433
APPLICATION Can Central Banks Always Control the Interest Rate?
A Lesson from the Crisis of 2008–2009 435
Changes in Real Income and the Nominal Interest Rate 436
The Monetary Model: The Short Run Versus the Long Run 436

3 The Asset Approach: Applications and Evidence 437

The Asset Approach to Exchange Rates: Graphical Solution 437
Short-Run Policy Analysis 439
APPLICATION The Rise and Fall of the Dollar, 1999–2004 442

4 A Complete Theory: Unifying the Monetary and

Asset Approaches 443
Long-Run Policy Analysis 445
SIDE BAR Confessions of a Foreign Exchange Trader 446
Overshooting 450
SIDE BAR Overshooting in Practice 452

5 Fixed Exchange Rates and the Trilemma 453

What Is a Fixed Exchange Rate Regime? 453
Pegging Sacrifices Monetary Policy Autonomy in the Short Run:
Example 453
Pegging Sacrifices Monetary Policy Autonomy in the Long Run:
Example 455
The Trilemma 456
SIDE BAR Intermediate Regimes 458
APPLICATION The Trilemma in Europe 459

6 Conclusions 460
APPLICATION News and the Foreign Exchange Market in
Wartime 460
Key Points, Key Terms, and Problems

CHAPTER 13 National and International Accounts: Income, PART 6

Wealth, and the Balance of Payments 469 The Balance of
Payments
1 Measuring Macroeconomic Activity: An Overview 470
The Flow of Payments in a Closed Economy: Introducing the National
Income and Product Accounts 470
The Flow of Payments in an Open Economy: Incorporating the Balance of
Payments Accounts 472
xviii CONTENTS

2 Income, Product, and Expenditure 475

Three Approaches to Measuring Economic Activity 475
From GNE to GDP: Accounting for Trade in Goods and Services 475
From GDP to GNI: Accounting for Trade in Factor Services 476
APPLICATION Celtic Tiger or Tortoise? 477
From GNI to GNDI: Accounting for Transfers of Income 479
What the National Economic Aggregates Tell Us 480
HEADLINES Are Rich Countries “Stingy” with Foreign
Aid? 481
Understanding the Data for the National Economic Aggregates 482
What the Current Account Tells Us 484
APPLICATION Global Imbalances 485

3 The Balance of Payments 490

Accounting for Asset Transactions: The Financial Account 490
Accounting for Asset Transactions: The Capital Account 490
Accounting for Home and Foreign Assets 491
How the Balance of Payments Accounts Work: A Macroeconomic
View 492
How the Balance of Payments Accounts Work: A Microeconomic
View 493
SIDE BAR The Double-Entry Principle in the Balance of
Payments 494
Understanding the Data for the Balance of Payments Account 495
What the Balance of Payments Account Tells Us 497

4 External Wealth 498

The Level of External Wealth 499
Changes in External Wealth 499
Understanding the Data on External Wealth 501
What External Wealth Tells Us 503

5 Conclusions 503
SIDE BAR Beware of Greeks Bearing Statistics 503
Key Points, Key Terms, and Problems

Appendix to Chapter 13 509

CHAPTER 14 Output, Exchange Rates, and Macroeconomic

Policies in the Short Run 511
1 Demand in the Open Economy 512
Preliminaries and Assumptions 512
Consumption 513
Investment 514
 CONTENTS xix

The Government 514

The Trade Balance 515
HEADLINES Oh! What a Lovely Currency War 517
HEADLINES The Curry Trade 518
APPLICATION The Trade Balance and the Real Exchange Rate 519
SIDE BAR Barriers to Expenditure Switching: Pass-Through and
the J Curve 521
Exogenous Changes in Demand 523

2 Goods Market Equilibrium: The Keynesian Cross 524

Supply and Demand 524
Determinants of Demand 525
Factors That Shift the Demand Curve 525
Summary 527

3 Goods and Forex Market Equilibria: Deriving the IS Curve 528

Equilibrium in Two Markets 528
Forex Market Recap 528
Deriving the IS Curve 530
Factors That Shift the IS Curve 531
Summing Up the IS Curve 533

4 Money Market Equilibrium: Deriving the LM Curve 534

Money Market Recap 534
Deriving the LM Curve 534
Factors That Shift the LM Curve 535
Summing Up the LM Curve 536

5 The Short-Run IS-LM-FX Model of an Open Economy 537

Macroeconomic Policies in the Short Run 537
Monetary Policy Under Floating Exchange Rates 539
Monetary Policy Under Fixed Exchange Rates 540
Fiscal Policy Under Floating Exchange Rates 541
Fiscal Policy Under Fixed Exchange Rates 542
Summary 544

6 Stabilization Policy 545

APPLICATION The Right Time for Austerity? 545
Problems in Policy Design and Implementation 547
APPLICATION Poland Is Not Latvia 548
APPLICATION Macroeconomic Policies in the Liquidity Trap 550

7 Conclusions 554
Key Points, Key Terms, and Problems
xx CONTENTS

Appendix 1 to Chapter 14 559

Appendix 2 to Chapter 14 561

PART 7 CHAPTER 15 Fixed Versus Floating: International Monetary

Applications and Experience 563
Policy Issues
1 Exchange Rate Regime Choice: Key Issues 565
APPLICATION Britain and Europe: The Big Issues 565
Key Factors in Exchange Rate Regime Choice: Integration and
Similarity 570
Economic Integration and the Gains in Efficiency 570
Economic Similarity and the Costs of Asymmetric Shocks 571
Simple Criteria for a Fixed Exchange Rate 572
APPLICATION Do Fixed Exchange Rates Promote Trade? 573
APPLICATION Do Fixed Exchange Rates Diminish Monetary
Autonomy and Stability? 575

2 Other Benefits of Fixing 578

Fiscal Discipline, Seigniorage, and Inflation 578
SIDE BAR The Inflation Tax 579
Liability Dollarization, National Wealth, and Contractionary
Depreciations 581
Summary 587

3 Fixed Exchange Rate Systems 588

Cooperative and Noncooperative Adjustments to Interest Rates 588
Cooperative and Noncooperative Adjustments to Exchange Rates 591
APPLICATION The Gold Standard 593

4 International Monetary Experience 595

The Rise and Fall of the Gold Standard 595
Bretton Woods to the Present 598

5 Conclusions 601
Key Points, Key Terms, and Problems

CHAPTER 16 The Euro 605

1 The Economics of the Euro 608
The Theory of Optimum Currency Areas 608
Simple Optimum Currency Area Criteria 609
What’s the Difference Between a Fix and a Currency Union? 610
Other Optimum Currency Area Criteria 611
APPLICATION Optimum Currency Areas: Europe Versus the United
States 613
 CONTENTS xxi

Are the OCA Criteria Self-Fulfilling? 616

Summary 618
HEADLINES Currency Unions and Trade 619

2 The History and Politics of the Euro 620

A Brief History of Europe 620
Summary 626

3 Eurozone Tensions in Tranquil Times, 1999–2007 627

The European Central Bank 628
The Rules of the Club 632
Sticking to the Rules 636

4 The Eurozone in Crisis, 2008–2013 637

5 Conclusions: Assessing the Euro 645

HEADLINES A Bad Marriage? 646
Key Points, Key Terms, and Problems

Index I-1
 Preface
The twenty-first century is an age of unprecedented globalization. In looking at existing
texts, we saw that the dramatic economic developments of recent years had not been
incorporated into a newly written undergraduate text, and felt the time was ripe to
incorporate fresh perspectives, current topics, and up-to-date approaches into the study
of international economics. With this book, we have expanded the vision of interna-
tional economics to encompass the latest theories and events in the world today.
In decades past, international economics was taught differently. There was a much
greater emphasis on theory and a strong focus on advanced countries. Policy analy-
sis reflected the concerns of the time, whether strategic trade policy or the Bretton
Woods system. Today, the concerns are not the same. In addition to new theoreti-
cal developments, there is a much greater emphasis on empirical studies. A wave of
applied research in recent years has proved (or refuted) existing theories and taught us
important new lessons about the determinants of trade, factor flows, exchange rates,
and crises. Trade and capital flows have been liberalized and allowed to grow, and
more attention is now devoted to emerging markets and developing countries, regions
that now carry substantial weight in the global economy.
Covering new and expanding ground is part of the challenge and excitement of
teaching and learning the international economics of the twenty-first century. Our
goal is to provide new material that is rigorous enough to meet the challenge yet
approachable enough to nurture the excitement. Many of the new topics stand apart
from conventional textbook treatments and in the past had been bypassed in lectures
or taught through supplementary readings. In our view they deserve a more promi-
nent place in today’s curriculum.
We have taught the chapters of this book ourselves several times, and have ben-
efited from the feedback of professors at colleges and universities in the United States
and throughout the world. Like us, they have been enthusiastic about the response
from students to our fresh, accessible, and up-to-the-minute approach, and we hope
that you will enjoy the book, too.

Features
Each chapter includes several features that bring the material alive for the students:
o Applications, which are integrated into the main text and use material that
has been covered to illuminate real-world policies, events, and evidence.
o Headlines, which show how topics in the main text relate directly to media
coverage of the global economy.
o Side Bars, which include topics that, although not essential, are nonetheless of
interest.
o Net Work boxes, located at the end of the chapters with homework prob-
lems, provide an opportunity for the students to explore chapter concepts on
the Internet.

� xxii
 PREFACE xxiii

The book is issued in a variety of formats that allows instructors greater flexibility
in tailoring the content to their needs, and may help keep costs down for students.
o a combined edition (International Economics);
o two split editions (International Trade and International Macroeconomics); and
o a brief, combined edition with select chapters that cover international
trade and macroeconomics, suitable for a one-semester course (Essentials of
International Economics).

New in the Third Edition

In this third edition we have thoroughly updated the text, to include new data
and Applications, as well as many new Headline features to reflect the rapid
changes in international economic news during the last three years. (Chapter
numbers in this section refer to the combined book; see later for details on the
other editions.) We begin the volume with news of the opening of a Northern
Sea route for international trade flows, made possible by the melting of ice in
the Arctic Circle. The Northern Sea route reduces the shipping distance between
Asia and Europe by about 4,000 nautical miles, as compared with the existing
route through the Suez Canal. When this route becomes passable for much of
the year, it will likely substantially alter international trade flows. Another item
of news has been the migration of refugees from Africa to the Italian island
of Lampedusa, covered in Chapter 5, which has created a humanitarian crisis
there. In Chapter 8, we discuss the recently expired U.S. tariff against imports
of Chinese tires, and argue that the structure of these tariffs led to substantial
welfare losses before they expired. Trade policies adopted by the Chinese govern-
ment receive increased attention, including: export subsidies to solar panels and
the resulting antidumping tariffs in the United States (Chapter 9), and Chinese
quotas on the export of “rare earth” minerals (Chapter 10). In international
macroeconomics, we begin Chapter 12 with news and discussion focusing on the
economic crisis in Iceland in 2008. Chapters 13 to 16 include updates to all key
macroeconomic data and other revisions to streamline and simplify the presenta-
tion. Chapter 18 adds news from recent global macro policy issues (such as the
“currency war” debate), retains an application on fiscal stimulus in the United
States, and looks at Eurozone issues with news and analysis comparing Poland
and Latvia’s divergent paths since 2008. Chapter 21 on the euro has been rewrit-
ten and expanded to cover the dramatic developments since 2010, including the
Greek debt restructuring, assistance programs in Spain, Ireland and Portugal,
the Cyprus banking crisis, and the ongoing battle to avert the threats to the very
existence of the currency union project.
Finally, in response to the needs and feedback of those instructors who teach a
one-semester course that combines international trade and macroeconomics, our text
comes in a shorter one-semester Essentials version. Again, we have learned from the
experiences of faculty teaching this course, and we include 16 chapters most relevant
to teaching the one-semester course. The third edition of Essentials now includes the
chapter on the euro. There is more information on this one-semester version later in
the Preface.
Another random document with
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portaient et l’on pouvait en trouver et en déguster deux cents en cinq
minutes.
Le temps coula et les baies disparurent. Ce fut octobre. Les nuits
se firent très froides et des jours entiers s’écoulèrent sans qu’on revît
le soleil briller dans un ciel sombre et pesant de nuages. Sur les
pics, la neige s’amassait en couches toujours plus épaisses sans
plus jamais fondre à l’approche des crêtes.
Puis la neige tomba jusque dans les vallées. Ce ne fut d’abord
qu’un blanc tapis qui fit frissonner les pieds de Muskwa, mais
disparut bientôt. Des vents rudes descendirent du Nord. Au doux
bourdonnement estival de la vallée succédèrent des gémissements
et des cris rauques dans la nuit. Des chants tristes sortaient des
arbres et Muskwa trouva le monde transformé.
En ces jours glacés et si sombres, il se demandait pourquoi Tyr
restait sur ces pentes balayées par les vents quand on eût trouvé en
bas de bons abris. Mais Tyr aurait pu lui expliquer que l’hiver,
désormais, était proche et que ces pentes exposées restaient le seul
terrain où ils pussent trouver leur nourriture.
Plus de baies, dans les vallées ; l’herbe et les racines n’y
contenaient plus guère de sucs nourriciers ; c’eût été temps perdu
que d’y chercher des fourmis et des larves et, au lieu de venir
batifoler à la surface des lacs, les poissons se tenaient en eau
profonde.
C’était la saison où les caribous ont autant de flair que des
renards et où ils filent comme le vent.
Les seuls repas sur quoi on pût faire fond, vrais dîners de famille
se composaient de quelques misérables rongeurs que Tyr devait
gagner à la peine de ses griffes, en fouissant, travail où Muskwa
l’aidait dans la faible mesure de ses forces. Il leur arriva plus d’une
fois de retourner des mètres cubes de terre avant que de parvenir au
chaud abri hivernal d’une famille d’infortunés dormeurs. Ils
creusaient pendant des heures pour s’emparer, en tout et pour tout,
de trois ou quatre rongeurs gros comme des écureuils, mais, en
revanche, délicieusement gras.
Ils vécurent ainsi les premiers jours d’octobre et les premiers de
novembre. Alors, la neige, les vents glacés et les furieuses tempêtes
du Nord se donnèrent pleine carrière. Mares et lacs commencèrent à
se recouvrir d’une couche glacée. Mais Tyr s’obstinait à rester à
flanc de montagne. Muskwa grelottait dans les nuits froides et il se
demandait douloureusement si le soleil n’était pas disparu pour
jamais.
Un jour, vers la mi-novembre, Tyr s’arrêta soudain, alors qu’il
était en train de fouir en quête d’un déjeuner et il partit vers le Sud
avec un air tout affairé. Ils se trouvaient alors à environ dix milles du
défilé, mais le grizzly menait un train si vif et si soutenu qu’ils y
parvinrent avant la nuit, dans le même après-midi.
Pendant les deux jours qui suivirent, Tyr ne parut plus avoir
aucun but dans la vie. Il n’y avait rien à manger dans ce défilé. Il
errait parmi les rochers, flairant, écoutant et se conduisant, en
somme, d’une façon fort incompréhensible pour Muskwa.
L’après-midi du second jour, Tyr fit halte dans un bouquet de pins
où le sol était jonché d’aiguilles tombées, qu’il se mit à manger.
Muskwa trouvait cette nourriture assez mauvaise, mais quelque
chose disait à l’ourson qu’il lui fallait agir à l’exemple de Tyr. Alors il
attrapait avec sa langue ces mauvaises aiguilles et il les avalait
sagement, sans se douter que la nature prépare ainsi les ours au
long sommeil de l’hiver.
A quatre heures, ils parvinrent à l’entrée de la caverne où Tyr
était né. Là encore le grizzly s’arrêta, flairant le vent en haut puis en
bas, attendant on ne savait quoi. Le jour s’assombrissait. Une
tempête hurlante s’abattait sur le défilé. Des vents mordants
tombaient du haut des pics ; le ciel était noir et tout plein de neige.
Pendant une minute, le grizzly resta là, à moitié engagé dans
l’entrée de la caverne, puis il y pénétra, suivi de Muskwa. Ils
s’enfoncèrent sous terre, plus bas, toujours plus bas, à travers des
ténèbres de poix, tandis que l’air se réchauffait sans cesse et que la
plainte du vent mourait au loin. Bientôt elle ne fut plus qu’un
murmure.
Il fallut bien une demi-heure à Tyr avant que de s’être placé bien
convenablement pour dormir. Alors Muskwa se coucha en rond à
ses côtés, tout pénétré de bonne chaleur, avec un grand sentiment
de confortable.
 Ce fut une nuit de furieuse tempête et la neige tomba en
abondance. Elle venait sur le défilé en nuages qui entraînaient
encore d’autres nuages plus épais, et le monde se trouva comme
enterré. Au matin, il n’y avait plus de rocs, plus d’entrée de caverne,
plus de buissons, plus de noir ni de rouge sur les arbres. Tout était
blanc, immobile et silencieux ; plus un murmure dans la vallée.
Loin, au fond de la caverne, Muskwa s’agitait sans répit. Tyr fit un
grand soupir et tous deux s’endormirent d’un long et profond
sommeil. Peut-être bien qu’ils rêvèrent.

FIN
 TABLE DES MATIÈRES

Chapitres Pages
I. — Le monarque et son domaine 1
II. — Langdon 8
III. — Tyr 17
IV. — Le plan de chasse 26
V. — Muskwa 34
VI. — Le caribou 47
VII. — Bruce bavarde 59
VIII. — La mère de Muskwa 70
IX. — Le duel de Tyr 83
X. — Par-dessus les montagnes 96
XI. — Bruce et Langdon sur le théâtre du combat 107
XII. — Pimootao 112
XIII. — Les amours de Tyr 129
XIV. — La venue des chiens 140
XV. — A la recherche de Tyr 158
XVI. — Muskwa se civilise 171
XVII. — Face à face 187
XVIII. — La miséricorde des forts 197
XIX. — Le dernier combat 205
XX. — Adieu, Muskwa 213
XXI. — Muskwa à la recherche de son ami 219
ACHEVÉ D’IMPRIMER LE 19 FÉVRIER
MIL NEUF CENT VINGT-SIX, PAR
L’IMPRIMERIE FLOCH A MAYENNE
POUR LES ÉDITIONS G. CRÈS ET Cie.
 LES LIVRES QU’IL FAUT LIRE

J.-O. Curwood. —Nomades du Nord.

— Kazan.
— Le Piège d’Or.
— Les Chasseurs de Loups.
— Les Cœurs les plus farouches.
— Bari, chien-loup.
Jack London. —Le Vagabond des Étoiles.
— Michaël, chien de cirque.
— La Peste écarlate.
— Le Talon de fer.
— Croc-Blanc.
— Jerry dans l’Ile.
— Le Fils du Loup (Nouvelle Édition).
— Martin Eden.
Maurice Renard. —Le Singe.
— Suite fantastique.
— Le Péril bleu.
— Le Voyage immobile.
— Le Docteur Lerne, sous-dieu.
Cyril-Berger. — L’Expérience du Docteur Lorde.
Rd-P. Lefers. — La Tragique histoire des flibustiers.
Trelawny. — Les Aventures d’un Cadet.
Daniel de Foe. — L’Étonnante vie du colonel Jack.
Pierre Mac Orlan. — Le Chant de l’Équipage.
H.-H. Ewers. — Mandragore.
L. Chadourne. — Le Maître du Navire.

LES ÉDITIONS CRÈS & Cie

24, Rue de Hautefeuille
PARIS (VIe)
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