International Economics: Theory and Policy, 12th edition

Published by Pearson (December 16, 2021) © 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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For international economics, finance and trade courses.

A balanced, global approach to economic theory and policy applications

International Economics: Theory and Policy provides balanced coverage of key concepts and practical applications of theory and policy around the world. With the first half devoted to trade and the second to monetary questions, the text provides an intuitive intro to theory and events as well as detailed coverage of the actual policies put into place as a response.

Drawing lessons from the COVID-19 pandemic, the 12th Edition highlights important economic developments, so students understand the changing world economy and economic implications of global interdependence.

Hallmark features of this title

A unified structure

  • For each topic, chapters on core theory are followed by application chapters that confront policy questions using the newest work, data and policy debates, so students see concepts in action.
  • The first half of the text provides engaging and practical coverage of the tenets and applications of international trade. Content in the latter brings international finance to life.

Learner-focused tools

  • Learning Goals list essential concepts so students understand the takeaway from each chapter.
  • Captioned Diagrams, Summaries, and Key Terms reinforce discussions and/or recap the major points in the text to aid students' study.
  • End-of-Chapter Problems, many of which cite real data or policies, allow students to practice what they're learning.

New and updated features of this title

The latest events

  • NEW and UPDATED: Discussions highlight recent developments in international economics theory and policy. They include the impacts of Brexit and COVID-19 (Ch. 7), firms' global sourcing decisions and the new USMCA treaty (Ch. 8), US-China trade tensions (Ch. 10), and the effects of the Trump trade war on global trade and the COVID-19 pandemic (Ch. 19).

Learner-focused tools

  • NEW and UPDATED: Case Studies engage students with theory and practice, using real-world applications and events that provide important historical context. New cases examine the potential link between import competition from developing countries and declines in manufacturing employment in the US (Ch. 4), the gains to US consumers from Chinese imports (Ch. 6), and the distributional consequences of the Trump trade war (Ch. 9).
  • UPDATED: Special Boxes offer vivid illustrations and videos of points made in the text, to better explain particular concepts in an engaging fashion. New boxes discuss the impact of trade shocks on developing countries (Ch. 6), currency manipulation (Ch. 19), the global financial cycle (Ch. 22), and more.

Features of MyLab Economics for the 12th Edition

  • Homework and practice exercises in MyLab are correlated to the exercises in the text, reflecting each author's approach and learning style. They regenerate algorithmically to give students unlimited opportunity for practice and mastery.
  • Every week, microeconomic and macroeconomic news stories and accompanying exercises are posted to MyLab. Assignable and auto-graded, these multi-part exercises ask students to recognize and apply economic concepts to current events.
  • Real-Time Data Analysis Exercises use up-to-the-minute, real-time macroeconomic data from the Federal Reserve Bank of St. Louis's FRED™ site, to test students' knowledge.
  • Animated Graphs in MyLab accompany many of the key graphs and figures in the text and have been updated with real-time data from FRED. The graphs help students understand shifts in curves, movements along curves, and changes in equilibrium values.
  • NEW: Dynamic Study Modules use the latest developments in cognitive science and help students study chapter topics by adapting to their performance in real time.
  • Digital Interactives are dynamic and engaging assessment activities that promote critical thinking and the application of key economic principles.

Features of Pearson eText for the 12th Edition

  • Engage learners with compelling media. Videos and animations bring key concepts to life, helping students place what they are reading into context.
  1. Introduction


  1. Word 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 and Foreign Sourcing Decisions and Multinational Enterprises


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


  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


  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

About our authors

Paul Krugman, 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 Center of the City University of New York, associated with the Luxembourg Income Study, which tracks and analyzes income inequality around the world. He received his BA from Yale and his PhD from MIT. Before Princeton, he taught at Yale, Stanford, and MIT. He also spent a year on the staff of the Council of Economic Advisers in 1982 to 1983. His research has included trailblazing work on international trade, economic geography, and currency crises. In 1991, Krugman received the American Economic Association’s John Bates Clark medal. In addition to his teaching and academic research, Krugman writes extensively for nontechnical audiences. He 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 to 1986) and the University of Pennsylvania (1986 to 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 he served as chief economist at the International Monetary Fund. Before that, he served as an honorary adviser to the Bank of Japan’s Institute of Monetary and Economic Studies. Among Professor Obstfeld's honors are the Frank Graham Lecture at Princeton, the inaugural Mundell-Fleming Lecture of the International Monetary Fund, the Bernhard Harms Prize and Lecture of the Kiel Institute for World Economy, the L. K. Jha Memorial Lecture at the Reserve Bank of India, and the Richard T. Ely Lecture of the American Economic Association. Professor Obstfeld is a Fellow of the Econometric Society and the American Academy of Arts and Sciences. He is active as a research fellow of the Centre for Economic Policy Research and a research associate of the National Bureau of Economic Research. Most recently, he has joined the Peterson Institute for International Economics in Washington, DC, as a nonresident senior fellow.

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 PhD 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. More specifically, he studies producer-level responses to globalization and their implications for aggregate trade and investment patterns. His research has been funded by the Sloan Foundation and by the NSF.

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