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December 1986

How Open Is the U.S. Economy?

Posted 1986-12-01

Coping with Bank Failures: Some Lessons from the United States and the United Kingdom

by R. Alton Gilbert and Geoffrey E. Wood

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.

Posted 1986-12-01

Why Has Manufacturing Employment Declined?

by John A. Tatom

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.

Posted 1986-12-01

Preface

Posted 1986-12-01

Part 1: Integration of the U.S. Economy:

The United States as an Open Economy

by Richard N. Cooper

Richard N. Cooper 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.

Posted 1986-12-01

Part 1: Integration of the U.S. Economy:

Commentary on "The United States as an Open Economy"

by Peter B. Kenen

Posted 1986-12-01

Part 1: Integration of the U.S. Economy:

International Capital Mobility and Crowding-out in the U.S. Economy: Imperfect Integration of Financial Markets or of Goods Markets?

by Jeffrey A. Frankel

Jeffrey A. Frankel 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.

Posted 1986-12-01

Part 1: Integration of the U.S. Economy:

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

by Frederic S. Mishkin

Posted 1986-12-01

Part II: Macroeconomic Effects of Increased Openness:

A VAR Analysis of Economic Interdependence: Canada, the United States, and the Rest of the World

by John Kuszczak

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.

Posted 1986-12-01

Part II: Macroeconomic Effects of Increased Openness:

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

by Georg Rich

Posted 1986-12-01

Part II: Macroeconomic Effects of Increased Openness:

Implications of the U.S. Net Capital Inflow

by Benjamin M. Friedman

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.

Posted 1986-12-01

Part II: Macroeconomic Effects of Increased Openness:

Commentary on "Implications of the U.S. Net Capital Inflow"

by John Huizinga

Posted 1986-12-01

Part III: Policy Responses to Increased Openness:

International Interdependence and the Constraints on Macroeconomic Policies

by Jacob A. Frenkel

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.

Posted 1986-12-01

Part III: Policy Responses to Increased Openness:

Commentary on "International Interdependence and the Constraints on Macroeconomic Policies"

by William Poole

Posted 1986-12-01

Part III: Policy Responses to Increased Openness:

The Dollar Exchange Rate and International Monetary Cooperation

by Ronald I. McKinnon

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.

Posted 1986-12-01

Part III: Policy Responses to Increased Openness:

Commentary on "The Dollar Exchange Rate and International Monetary Cooperation"

by Roger E. Brinner


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