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International Macroeconomics

Peter J. Montiel

ISBN: 978-1-405-18386-4 May 2009 Wiley-Blackwell 512 Pages


International Macroeconomics provides students with an analytically rigorous introduction to the impact of globalization on macroeconomics.

*         Presents an analytically rigorous introduction to the field and uniquely includes optional econometric studies
*         Provides a unified macroeconomic model to examine rigorously international macroeconomics and then focuses this model on historic cases, institutions, and specific countries, dealing with various types of macroeconomic crises
*         Provides a strong policy orientation by an author who worked for many years at the IMF
*         Is supported by a website with extensive solutions for the problem sets, PowerPoint slides, and an update on the 08-09 meltdown

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Part 1 Foundations

Chapter 1 An Overview of the Book

1.1 What Is International Macroeconomics?

1.2 The International Macroeconomics Toolkit

1.3 The Contents of this Book

Chapter 2 Open-economy Macroeconomic Accounting

2.1 The Balance of Payments Accounts

2.2 Sub-accounts in the Balance of Payments

2.3 Basic BOP Facts for the United States

2.4 The NIPA in an Open Economy: Aggregate Identities

2.5 Sectoral Identities

Chapter 3 Macroeconomic Influences on the Foreign Exchange Market

3.1 Exchange Rate Concepts

3.2 Supply and Demand for Foreign Exchange

3.3 Relative Prices of Domestic and Foreign Goods: The Real Exchange Rate

3.4 Relative Returns on Domestic and Foreign Assets: Interest Parity Conditions

3.5 Central Bank Intervention in the Foreign Exchange Market: Exchange Rate Regime

Appendix 3.1 Properties of Logarithms

Chapter 4 The Macroeconomic Framework

4.1 Production Structure and Economic Agents

4.2 Equilibrium in the Market for Financial Assets

4.3 Equilibrium in the Market for Domestic Goods

4.4 Equations and Unknowns: Imposing Additional Structure

Appendix 4.1 The Marshall–Lerner Condition

Appendix 4.2 The Framework in Log-Linear Form

Part 2 Fixed Exchange Rates

Chapter 5 The Classical Gold Standard

5.1 Evolution of the International Gold Standard

5.2 Central Bank Behavior under the Gold Standard

Chapter 6 Gold Standard Macroeconomics

6.1 Short-Run Macroeconomics under the Gold Standard

6.2 Short-Run Comparative Statics

6.3 The Long-run Model

6.4 The Gold Standard as an International Monetary System

Appendix 6.1 The Gold Standard with Zero Capital Mobility 

Chapter 7 The Bretton Woods System

7.1 Evolution of the Bretton Woods System

7.2 Modeling Soft Pegs with Imperfect Capital Mobility

7.3 The Bond Market Equilibrium (BB) Curve

7.4 Properties of the BB Curve

Chapter 8 Macroeconomics under "Soft" Pegs and Imperfect Capital Mobility

8.1 Solving the Model

8.2 Comparative Statics

8.3 Bretton Woods as an International Monetary System

Appendix 8.1 Alternative Monetary Policy Regimes 

Chapter 9 Fixed Exchange Rates in a Financially Integrated World: Currency Crises and "Hard" Pegs

9.1 Soft Pegs with High Capital Mobility

9.2 Currency Crises

9.3 Financial Integration and Crises

9.4 Modern Versions of Hard Pegs

9.5 Soft Versus Hard Pegs: Some Policy Issues

Appendix 9.1 The Monetary Approach to the Balance of Payments (MABP) 

Part 3 Floating Exchange Rates

Chapter 10 Floating Exchange Rates I: Transitory Shocks

10.1 Analytical Framework

10.2 Solving the Floating Exchange Rate Model

10.3 Comparative Statics

Appendix 10.1 The Asset Market Approach to the Exchange Rate

Appendix 10.2 Algebraic Solution of the Log-linear Model

Appendix 10.3 Interest Rate Targeting under Floating Exchange Rates

Chapter 11 Floating Exchange Rates II: Intermediate and Permanent Shocks

11.1 Anticipated Future Shocks

11.2 Multi-period Shocks

11.3 Permanent Shocks

11.4 Comparing Permanent and Transitory Shocks

Chapter 12 Floating Exchange Rates III: Exchange Rate Dynamics

12.1 Asymmetric Adjustment in Goods and Asset Markets

12.2 The Dornbusch Overshooting Model

12.3 Comparative Statics

12.4 Generalizing the Model

Chapter 13 Long-run Equilibrium under Floating Exchange Rates

13.1 A Long-run Model

13.2 Solving the Long-run Model

13.3 Comparative Statics

13.4 Comparing the Short-run and Long-run Responses to Permanent Shocks

13.5 The Role of Long-run Inflation

Appendix 13.1 The Long-run Floating Rate Model in Log-linear Form

Appendix 13.2 Fixed Exchange Rates in the Long Run 

Chapter 14 Floating Exchange Rates with Short-run Price Flexibility

14.1 A "Flexprice" Model

14.2 Real Exchange Rate Dynamics

14.3 The Monetary Approach to the Exchange Rate

14.4 Currency Crises Revisited

14.5 Gradual Price Adjustment

Chapter 15 Choosing an Exchange Rate Regime

15.1 Optimality Criterion I: Minimizing the Costs of Making International Transactions

15.2 Optimality Criterion II: Long-run Inflation Stabilization

15.3 Optimality Criterion III: Short-run Macroeconomic Stability

15.4 Weighing Optimality Criteria

Part 4 International Monetary Cooperation

Chapter 16 The International Financial Architecture

16.1 The International Monetary System after Bretton Woods

16.2 The International Debt Crisis

16.3 Changes in the International Macroeconomic Environment in the 1990s

16.4 Proposals for Reforming the International Financial Architecture

Chapter 17 G-8 Policy Coordination

17.1 Why Coordinate? Theory

17.2 Comparative Statics

17.3 Post-Bretton Woods International Policy Coordination among the G-8 Countries

17.4 The US Current Account Deficit in the 2000s

Chapter 18 Monetary Unification

18.1 Economic Integration in Western Europe

18.2 European Monetary Integration

18.3 Monetary Union in West Africa

18.4 The Eastern Caribbean Currency Union

Part 5 The New International Macroeconomics

Chapter 19 Intertemporal Issues in International Macroeconomics

19.1 A Simple One-Good Model

19.2 A Two-Good Model

19.3 Introducing the Government


  • Includes 20 optional econometric studiesand over 65 boxed examples and cases.
  • Provides a uniquely unified, single model approach to international macroeconomics and then focuses this model on historic cases, institutions, and specific countries.
  • Provides a strong policy orientation by an author who worked for many years at the IMF.  Much more emphasis is given to small country exchange rate problems.
  • Is supported by a website with extensive solutions for the problem sets, image gallery, and annual summer updates on the current financial crisis, including a 20-page update.