Review

The authors examine the history of banking panics and the evolution of government policies designed to eliminate them in the United Kingdom and the United States.

The author examines the factors that determine manufacturing employment. He argues that the decline in manufacturing employment had occurred for two reasons. Part of the decline represents a transitory cyclical phenomenon. However, the decline is also due to the relatively rapid growth of productivity in manufacturing that has taken place throughout the post-WW II period.

The author examines the reasons, effects, and implications of art increasingly open U.S. economy. He notes that a major factor explaining increased foreign interaction is technological advances in communications and transportation. As lower transactions costs are realized, the volume of transactions correspondingly rises.

Commentary on "The United States as an Open Economy" by Richard N. Cooper.

The author examines the contention that “the U.S. economy has become so open financially as to be characterized by perfect capital mobility.” He investigates this belief by reconsidering the observation of Feldstein and Horioka that investment rates and national savings rates are highly correlated, implying low capital mobility.

Commentary on "International Capital Mobility and Crowding-out in the U.S. Economy: Imperfect Integration of Financial Markets or of Goods Markets?" by Jeffrey A. Frankel.

Through their empirical analysis, the authors find that U.S. variables are affected by international variables to a greater extent than many would think. An example in the sensitivity of domestic money demand to movements in foreign interest rates and in exchange rates.

Commentary on "A VAR Analysis of Economic Interdependence: Canada, the United States, and the Rest of the World" by John Kuszczak.

The author notes that the massive inflow of capital from abroad has been a key factor in equilibrating savings and investments in the United States despite large federal government deficits.

Commentary on "Implications of the U.S. Net Capital Inflow" by Benjamin M. Friedman.

Focusing primarily on monetary policy, the author shows that the combination of a more open economy and a flexible exchange rate regime quickens the effects of monetary changes on prices and wages.

Commentary on "International Interdependence and the Constraints on Macroeconomic Policies" by Jacob A. Frenkel.

The author holds that that unless there is a move toward greater international monetary policy coordination, sharp exchange rate fluctuations are inevitable. The basis for this position is the fact that under a floating exchange rate regime, governments are not required to follow common monetary policies, a condition that generally characterizes a fixed exchange rate regime.

Commentary on "The Dollar Exchange Rate and International Monetary Cooperation" by Ronald I. McKinnon.