Economic Disturbances and Equilibrium in an Integrated Global Economy

Economic Disturbances and Equilibrium in an Integrated Global Economy: Investment Insights and Policy Analysis helps readers develop a framework for analyzing economic events and make better, more consistent decisions. Victor Canto presents the theoretical building blocks that make up the overall framework, then expands the framework to tackle more complex problems, applying additional considerations to actual policy or investment issues. Drawing upon the most recent trends in monetary policy and international economics, the book offers sustained direct engagement with the main research question and makes innovative use of the simple concepts of supply and demand to illuminate modern finance literature.

The book succeeds by highlighting the often-forgotten interconnectedness of different economic processes. How do we respond to a change in policy or an economic shock? Are all the expected changes to the general equilibrium consistent with each other?

• Helps readers build an intellectual framework that enables them to interpret articles in the financial press and policy decisions in a logical and consistent manner
• Differs from other books by eschewing partial equilibria analyses and instead providing a general equilibrium perspective useful for investors and policy makers
• Provides supporting data on a freely-accessible website so readers can test and replicate results

Upper-division undergraduates, graduate students, and professionals in international economics, macroeconomics, financial economics, and monetary economics. This book can be read by anyone who reads The Economist or The Wall Street Journal

Introduction: Asset Allocation: Indexing, Smart Beta and Value Timing

Part I: Arbitrage and Mobility
1. Arbitrage, Mobility and Equilibrium Price
2. The Investment and Policy Insights and Implications Derived from Arbitrage and Mobility
3. Are Commodity Price Increases Equivalent to Tax Increases?
4. The Terms of Trade
5. Yields, Risk Premium, and Terms of Trade
6. The Competitive Economic Environment: Lessons from the States
7. Economic Policy and Performance: The Small-Cap and Country Effects
8. Migration: A Political Problem, an Economic Problem, or Both?

Part II: The Trade Balance
9. The Macro Prospective
10. Diversity and Harmonization
11. The State Competitive Environment: Integration and Convergence
12. The Degree of Global Integration and National Economies’ Policy Options and Limitations
13. A Unified Theory: The Terms of Trade, Real GDP Growth Rate Differentials, Trade Balance, Capital Flows, and Relative Stock Market Performance

Part III: Exchange Rate and the Terms of Trade
14. Protectionism, Devaluation, and the Terms of Trade
15. Exchange Rates, Devaluations and the Terms of Trade
16. The Nominal Exchange Rate, the Terms of Trade, and the Economy
17. The U.S. Experience: An Interpretation
18. Relative Price Changes, Income Redistribution, and the Politics of Envy
19. Self-sufficiency, Nationalism, and Protectionism: The Common Elements
20. Mercantilism Does Not Make for Good Economics

Part IV: The Balance of Payments
21. Building Block IV, Global Investing the Balance of Payments
22. Monetary Views: Part I
23. Monetary Views: Part II
24. The Greenspan Monetary Rule
25. Transparency and Rule-Based Monetary Policy
26. A Single or Dual Mandate?
27. The Demise of the Global Price Rule
28. The U.S. Inflation Rate
29. The Exchange Rate and Rest of the World Inflation

Part V: China--A Case Study
30. China in a Global Economy: An Interpretation
31. Examining China: Wealth, Income, and the Savings Rate
32. Examining China: Purchasing Power Parity, Terms of Trade, and Real Exchange Rates
33. Examining China: Economic Growth, Exchange Rates, and Relative Stock Performance
34. Examining China: Monetary Policy, Inflation Potential under a Floating Exchange Rate System
35. Examining China: Monetary Policy, Inflation Potential under a Fixed Exchange Rate System
36. Examining China: As a Non-Reserve Currency Country