Economic Disturbances and Equilibrium in an Integrated Global Economy - 1st Edition - ISBN: 9780128139936

Economic Disturbances and Equilibrium in an Integrated Global Economy

1st Edition

Investment Insights and Policy Analysis

Authors: Victor A. Canto
Paperback ISBN: 9780128139936
Imprint: Academic Press
Published Date: 26th April 2018
Page Count: 430
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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?

Key Features

  • 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

Table of Contents

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


No. of pages:
© Academic Press 2018
Academic Press
Paperback ISBN:

About the Author

Victor A. Canto

Dr. Victor Antonio Canto, Ph.D., is a Principal and the Chief Investment Officer at Allison Street Advisors. Previously Dr. Canto was a Managing Director at Cadinha Institutional Services; the Director, Chief Investment Officer, and Portfolio Manager at Calport Asset Management; and the President and Director of Research at A. B. Laffer, V. A. Canto & Associates. He was a tenured Associate Professor of Finance and Business Economics at the University of Southern California U.S.A. from 1983 until 1985. Prior to that, Dr. Canto was an Assistant Professor of Finance and Business Economics at the University of Southern California from 1977 to 1983. He has served as a visiting Professor at the Universidad Central del Este in the Dominican Republic. Dr. Canto was a visiting Professor of Economics at the University of Los Angeles during the winter of 1987. During 1980, he was a Consultant to the Financial Council of Puerto Rico and during 1977 Dr. Canto served as an Advisor to the Economic Studies Division of the Dominican Republic’s Central Bank. In 1975, he was a Technical Advisor to the Finance Minister of the Dominican Republic. Dr. Canto is the Chairman and Founder at La Jolla Economics, Inc. He has authored, edited, or co-edited a number of books, including the landmark Foundations of Supply-Side Economics; Monetary Policy, Taxation, and International Investment Supply; Supply-Side Portfolio Strategies; and Currency Substitution: Theory and Evidence from Latin America. Dr. Canto is the recipient of the Supremo de Plata awarded by the Dominican Republic JC to the outstanding Young Man of 1983 and the recipient of the University of Southern California University Scholar award. His scholarly articles have appeared in leading economic journals, including Economic Inquiry, Journal of Macroeconomics, The International Journal, Journal of Business and Economics Statistics, The Southern Economic Journal, Applied Economics, Weltwirstchaftliches Archiv, The CATO Journal, Public Finance, and The Journal of International Money and Finance. In addition to his principal fields of interest, International Economics, Public Finance, and Macroeconomics, Dr. Canto’s work has been published in the Wall Street Journal and the Investor's Business Daily, authored articles on energy markets for the Public Utilities Fortnightly, and the Oil and Gas Journal, as well as a series of articles on portfolio strategy for the Financial Analysts Journal. He is the contributing author to The New Palgrave Dictionary of Money and Finance and contributed Exotic Currencies to it, published by MacMillan Press Limited in 1992. Dr. Canto is a registered investment adviser with the State of California, located in La Jolla, California. He received his doctorate in Economics in 1977 and a Master of Arts degree in Economics in 1974 from the University of Chicago and his Bachelor of Science degree in Civil Engineering from the Massachusetts Institute of Technology in 1972.

Affiliations and Expertise

La Jolla Economics, La Jolla, CA, USA


"Victor Canto's work sets a new standard for explaining the most complex economic and financial questions of our time. He has simplified the interactions between politics, trade, and decision risk during the turbulent period of 2008. The reader will see that this book challenges assumptions that politicians have made in setting policies for immigration, trade and finance. When Dr. Canto asks a question, he suggests novel answers and alternatives. This is a terrific read for Governors and federal statesmen alike." --Roy A. Herberger, Jr., President Emeritus, Thunderbird School of Global Management

"Like me, Victor is an advocate of low taxation, minimal regulation, and sound money policy. He knows that these macro forces highly favor increased individual freedom and greater prosperity for all. The data prove it time and again. It’s hard not to be an advocate for what you know works." --Larry Kudlow, CNBC Senior Contributor

"Dr.Canto’s book covers, in its seven building blocks, a large spectrum of macroeconomics, trade, and financial theoretical topics by using mathematical tools and always referring to real world economic and financial problems. Graduate students in economics and business schools, financial market analysts, and policy makers in macroeconomic and trade policies now have in hand a rigorous book enlightened with spring water economics." --Tulio H. F. Arvelo Durán, Federal University of Rio de Janeiro

"Economic theory tells us how people will behave in reaction to government policies. Dr. Canto’s book tells us how to invest to take advantage of that behavior." --Doo Jin Ryu, Sungkyunkwan University

"Financial markets are often driven by government fiscal, regulatory, and central bank monetary policy actions. Understanding the likely impact of these policies is vital for policymaking and investment success in today’s increasingly global markets. This excellent book explains in easy-to-understand language both how the economy works and the investment implications. Economic students and investors should read this insightful and informative book." --Robert I. Webb, University of Virginia

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