International Economics: Theory and Policy, Global Edition, 12th edition

Published by Pearson (1 February 2022) © 2022

  • Paul R. Krugman The Graduate Center, City University of New York , Princeton University , University of California, Berkeley
  • Maurice Obstfeld University of California, Berkeley
  • Marc Melitz Harvard University

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Title overview

A balanced, global approach to economic theory and policy applications

International Economics: Theory and Policy, Global Edition, 12th Edition by Paul Krugman, Maurice Obstfeld, and Marc Melitz, provides an engaging, balanced coverage of the key concepts of international theory and policy, from theory to practice.

Divided into two halves, the first half is devoted to trading and the second half to monetary questions. The text provides a comprehensive introduction to theory and events, as well as detailed coverage of the actual policies put into place.

This latest edition is thoroughly updated and revised, highlighting important economic developments on a theoretical and practical level, with many updates focusing on the recent COVID-19 pandemic experience and its implications on the global economy.

Further updates include:

  • A study of the latest trends on import competition from developing countries – and especially case studies regarding China and the U.S. – China trade tensions.
  • A discussion of the impact of Brexit.
  • A study of the relationship between money supply and prices, illustrating the recent hyperinflation in Venezuela as an example.

An array of useful features, case studies and examples in the text will equip you with the intellectual tools necessary to understand the changing world economy and the economic implications of global interdependence.

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This title is a Pearson Global Edition. The Editorial team at Pearson has worked closely with educators around the world to include content, which is especially relevant to students outside the United States.

Hallmark features of this title

A unified structure drives student engagement and supports their understanding.
  • Set learning expectations for your students with a list of essential Learning Goals.
  • Encourage them to practice what they have learned with the End-of-Chapter Assignable Problems.
  • Reinforce group discussion with a series of Captioned Diagrams, Summaries, and Key Terms.
Engaging content brings concepts and applications of international finance to life.
  • Encourage your students' understanding of key concepts both in theory and action with the Theory and Application Chapters, addressing issues using the newest empirical work, data, and policy debates.
  • Introduce the latest models, causes and effects of trade policy via an integrated, empirical-based coverage throughout the text.

New and updated features of this title

Discussions use the newest data to highlight recent developments in international economics theory and policy.

NEW and UPDATED - The following chapters provide a new or updated discussion of:

  • The impacts of Brexit and COVID-19 (Chapter 7)
  • Firms' global sourcing decisions and the new USMCA treaty (Chapter 8)
  • US-China trade tensions (Chapter 10)
  • The effects of the Trump trade war on global trade and the COVID-19 pandemic (Chapter 19)
  • The Dec. 2020 EU–UK trade deal plus the prior withdrawal agreement and its implications for the Irish border (Chapter 21)
  • Euro-area policy innovations in response to COVID-19 (Chapter 21)

Learner-focused tools help them master the course material.

  • NEW and UPDATED - Case Studies engage students with theory and real-world applications. New case studies examine the potential link between import competition from developing countries and declines in manufacturing employment in the US (Chapter 4), the gains to US consumers from Chinese imports (Chapter 6), and more.
  • UPDATED - Special Boxes offer engaging, vivid illustrations and videos regarding points made in the text. New boxes discuss the impact of trade shocks on developing countries (Chapter 6), currency manipulation (Chapter 19), the global financial cycle (Chapter 22), and more.

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Table of contents

  1. Introduction

PART ONE: INTERNATIONAL TRADE THEORY

  1. World Trade: An Overview
  2. Labor Productivity and Comparative Advantage: The Ricardian Model
  3. Specific Factors and Income Distribution
  4. Resources and Trade: The Heckscher-Ohlin Model
  5. The Standard Trade Model
  6. External Economies of Scale and the International Location of Production
  7. Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

PART TWO: INTERNATIONAL TRADE POLICY

  1. The Instruments of Trade Policy
  2. The Political Economy of Trade Policy
  3. Trade Policy in Developing Countries
  4. Controversies in Trade Policy

PART THREE: EXCHANGE RATES AND OPEN-ECONOMY MACROECONOMICS

  1. National Income Accounting and the Balance of Payments
  2. Exchange Rates and the Foreign Exchange Market: An Asset Approach
  3. Money, Interest Rates, and Exchange Rates
  4. Price Levels and the Exchange Rate in the Long Run
  5. Output and the Exchange Rate in the Short Run
  6. Fixed Exchange Rates and Foreign Exchange Intervention

PART FOUR: INTERNATIONAL MACROECONOMIC POLICY

  1. International Monetary Systems: A Historical Overview
  2. Financial Globalization: Opportunity and Crisis
  3. Optimum Currency Areas and the Euro
  4. Developing Countries: Growth, Crisis, and Reform

Author bios

Paul Krugman, the recipient of the 2008 Nobel Memorial Prize in Economic Sciences, taught at Princeton University for 14 years. In 2015, he joined the faculty of the Graduate Centre of the City University of New York, associated with the Luxembourg Income Study, which tracks and analyses income inequality around the world.

In addition to his teaching and academic research, Krugman writes extensively for non-technical audiences and is a regular op-ed columnist for the New York Times.

Maurice Obstfeld is the Class of 1958 Professor of Economics at UC Berkeley. He joined Berkeley in 1989 as a Professor, following appointments at Columbia (1979-1986) and the University of Pennsylvania (1986-1989). He was also a visiting Professor at Harvard between 1989 and 1991.

From 2014 to 2015 he was a member of President Obama's Council of Economic Advisers, and from 2015 to 2018 served as Chief Economist at the International Monetary Fund.

Marc Melitz is the David A. Wells Professor of Political Economy at Harvard University. He holds a BA from Haverford College (1989), an MSBA from the Robert Smith School of Business (1992), and a Ph.D. from the University of Michigan (2000). He is a fellow of the Econometric Society and is affiliated with the National Bureau of Economic Research (NBER), the Centre for Economic Policy Research (CEPR), CESifo, and the Kiel Institute for the World Economy.

His broad research interests are in International Trade and Investment.

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