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Index

Environment, WTO and harming, 199200 Equalization, factor-price, 7476 Equilibrium rate of exchange, 382383 Equity swaps. see Debt/equity swaps Escape clause, 203206 Euro, 281, 290291 Eurodollar market, 531532 Europe has cow over hormone-treated U.S. beef, 181182 European Central Bank, 286, 289, 290 European Monetary Union (EMU), 281, 286292 challenges for EMU, 289290 Europe as suboptimal currency area, 288289 eurozone needing bailout fund, 290292 European tourists, dollar and, 381 European Union (EU), 273, 280286 French and Dutch voters sidetrack integra- tion, 282283 United Kingdom (UK) and entering, 278 Eurozone needing bailout fund, 290292 Exchange arbitrage, 386 controls, 484 equilibrium rate of, 382383 Exchange rates, 375 adjustable peg, 469 Bretton Woods system of fixed, 469471 cross, 377 determining long-term, 407410 determining short-term, 415421 effective, 384 expected change in, 420421 floating, 471474 forecasting, 425 increasing credibility of fixed, 486492 inflation differentials and, 416 long-term, 410415 nominal, 384 nominal and real, 383385 official, 465466 pass-through, 453456 real, 384 system, 462464 target, 475 Exchange-rate flexibility, 514516 index, 384, 385 overshooting, 423425 practices, 461462 risk, 394 stabilization, 466467 Exchange-rate adjustments and balance of payments, 441460 absorption approach to currency depreciation, 456458 cost-cutting strategies of manufacturers and currency appreciation, 445447 currency depreciation and trade deficit, 447450 effects of exchange-rate changes on costs and prices, 441445 elasticity approach, 447450 exchange rate pass-through, 453456 J-curve effect, 451453 monetary approach to currency depreciation, 458 time path of depreciation, 451453 Exchange-rate changes on costs and prices, effects of, 441445 Exchange-rate determination, 380383, 405432 asset-market approach, 415421 determining exchange rates, 405407

determining long-term exchange rates, 407410 determining short-term exchange rates, 415421 exchange-rate overshooting, 423425 forecasting foreign-exchange rates, 425430 inflation rates, purchasing power parity, and long-term exchange rates, 410415 ups and downs of dollar, 421423 Exchange-rate system, fixed, 464471 Bretton Woods system of fixed exchange rates, 469471 devaluation and revaluation, 467468 Exchange-rate systems and currency crises, 462494 capital controls, 484486 choosing exchange rate system, 462464 constraints imposed by free capital flows, 462464 crawling peg, 479480 currency crises, 480484 exchange-rate practices, 461462 exchange-rate stabilization, 466467 fixed exchange-rate system, 464471 floating exchange rates, 471474 increasing credibility of fixed exchange rates, 486492 managed floating rates, 474479 par value and official exchange rate, 465466 Exchange-stabilization fund, 466 Eximbank (Export-Import Bank), 219 Exit barriers, 5556 Expenditure-changing policies, 496 Expenditure-switching policies, 496 Export boom comes at a cost, Chinas, 264266 Export controls, production and, 241242 Export markets, unstable, 234236 Export promotion and financing, 219 Export quotas, 163165 Export ratio. see Debt service/export ratio Export subsidies, 166, 283, 284286 of advanced nations, agricultural, 240241 protection against foreign, 206207 Export tariff, 112 Exporters, tariffs burdening, 135138 Export-Import Bank (Eximbank), 219 Exporting nations, falling commodity prices threaten growth of, 235 Export-led growth, 257258 developing nations achieving, 259260 import substitution versus, 255260 Export-oriented policy, 257 External balance, 495 External economies of scale and comparative advantage, 89

F

Factor endowments as source of comparative

advantage, 6982 Factor-endowment theory, 7074 Factories play fair, China and making, 264266 Factor-price equalization, 7476 Fair-trade movement and poor coffee farmers, 244 Farmers, fair-trade movement and poor coffee,

244 Fast-track authority, 203 Federal Reserve Bank of Dallas, 141 Financial account, capital and, 347349 Financial flows and interest-rate differentials,

436438 Financial turmoil, monetary and fiscal policy

respond to, 497

Financing, export promotion and, 219 Fiscal policy, 496 Fiscal policy in closed economy, monetary and, 498500 Fiscal policy in open economy, monetary and, 500504 Fiscal policy respond to financial turmoil, monetary and, 497 Fiscal stimulus and buy American legislation, U.S., 180 Fixed exchange rates, Bretton Woods system of, 469471 Fixed exchange rates, increasing credibility of, 486492 Fixed exchange-rate system, 464471 Bretton Woods system of fixed exchange rates, 469471 devaluation and revaluation, 467468 use of fixed exchange rates, 464465 Flat world and Ricardo, 84 Floating exchange rates, 471474 Floating rates, managed, 474479 Floating system, managed, 474 Floats, clean and dirty, 474 Flying-geese pattern of economic growth, 261262 Ford, Henry, 189 Ford Motor Company, 165, 327, 360 Forecasting foreign-exchange rates, 425430 Forecasts judgmental, 426 technical, 426428 Foreign buyers, supplying products to, 315318 Foreign currencies, 517521 Foreign direct investment and economic development, 265 versus licensing, 316318 Foreign direct investment, motives for, 311314 Foreign direct investment/licensing, direct exporting versus, 315316 Foreign dumping, protection against, 207212 Foreign exchange, 369404 arbitrage, 385386 demand for, 380381 exchange-rate determination, 380383 foreign exchange trading as a career, 399401 foreign-currency options, 379380 foreign-exchange market speculation, 397399 forward market, 387394 forward markets, 377379 futures markets, 377379 indexes of foreign-exchange value of dollar, 383385 interbank trading, 373375 interest arbitrage, 394397 market, 369371 nominal and real exchange rates, 383385 reading foreign-exchange quotations, 375377 risk, 389391 supply of, 381382 traders, 400 trading as a career, 399401 transactions, 371373 types of foreign exchange transactions, 371373 Foreign export subsidies, protection against, 206207 Foreign investment net, 354355 in United States, 358 Foreign labor, protection against cheap, 142143 Foreign repercussion effect, 438 Foreign workers, U.S. multinationals exploit, 313 Foreign-currency

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