Macroeconomics › Section S · Macroeconomic policy around the world › Topic S.5
Balance of trade concerns and open-economy policy
Trading with the world brings large gains, but it also ties a country to foreign lenders who can arrive in a rush and leave in a panic. This topic looks at the worries that trade and capital flows raise, at the crises they have caused, and at how open economies protect themselves.
In this topic
- From suspicion to openness
- Two kinds of concern
- Concerns about trade in goods
- Where capital should flow
- The US deficit and the dollar
- Sudden stops: Asia in 1997
- Worked example: are the reserves enough?
- Worked example: when the inflow stops
- Crises closer to home
- Policy in an open economy
- Common mistakes to avoid
- Key takeaways
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