Samenvatting Globalisation and European Integration
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Course
Globalisation and European Integration
Institution
Fachhochschule Münster
Book
International Economics
Samenvatting bestaande uit college aantekeningen met duidelijke uitleg en voorbeelden. Bevat ook veel oefenopdrachten en voorbeelden van mogelijke toetsvragen. Belangrijkste onderwerpen: Balance of payment, Foreign trade theories and policies and International monetary economics. Tevens bevat het i...
Samenvatting Globalisation and European Integration
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Globalisation and European integration summary
Table of contents
1. Introduction ..................................................................................................................................... 2
1.1 Balance of payment ....................................................................................................................... 2
1.2 National accounts of open economies .......................................................................................... 4
2. Real foreign trade theory and policy ............................................................................................... 7
2.1 Theories of international trade ..................................................................................................... 7
2.2 Effects of international trade ...................................................................................................... 15
2.3 Foreign trade policy – aims, instruments and effects ................................................................. 16
2.4 International factor movements ................................................................................................. 18
3. International monetary economics ............................................................................................... 20
3.1 The foreign exchange market and the exchange rate................................................................. 20
3.3 Foreign exchange rate systems and the international monetary system ................................... 23
3.4 Optimum currency areas ............................................................................................................. 25
4. Important institutions for international trade .............................................................................. 25
Possible exam questions:
1. Questions: National account of open economies ......................................................................... 27
2. Questions: Trade policy ................................................................................................................. 27
3. Questions: Financial flows ............................................................................................................. 30
4. Questions: Theories of international trade ................................................................................... 30
5. Questions: Foreign trade policy .................................................................................................... 31
,1. Introduction
1.1 Balance of payment
Definition The balance of payments (BoP) is used to capture all economic transactions which take
place among residents and foreigners within a particular period of time in a systematic manner.
Major characteristics of the Balance of Payments:
- Flows (period of time), no stocks (point in time) -> “balance” misleading
- Several sub-balances* -> depend on type of transaction
- Double entry bookkeeping -> each transaction is recorded twice
- Methodological framework internationally harmonised -> comparability
* the two major sub-balances are: the current account (CA)and the financial account (FA).
Current account (CA) – Transactions with direct impact on domestic income
Financial account (FA) – International financial transactions of private and public actors
Domestic point of view – double entry bookkeeping of the current account balance and financial
account balance
,CA + FA = 0
Simplified structure:
Balancing within economic interpretation:
, 1.2 National accounts of open economies
Defenition National account (NA):
Three domestic sectors -> 1. Households, 2. Corporations, 3. Government
Economic cycle:
Closed economy:
Open economy:
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