Article

International Economics

Andrea Fracasso

in International Relations

ISBN: 9780199743292
Published online April 2013 | | DOI: http://dx.doi.org/10.1093/obo/9780199743292-0144
International Economics

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The closed economy framework—where people, firms, financial intermediaries, and public institutions interact as if the nation in which they are resident is isolated from the rest of the world—is used by economists for the explanatory advantages of such a simplified representation. Economic agents in almost all nations interact with foreign citizens and institutions. These interactions occur through a number of channels: exchanges of goods and services, transactions of currencies, flows of financial funds, transmission of ideas, and movement of persons. Moreover, private agents and institutions in different nations make decisions taking into account what foreigners decide and choose to either cooperate or compete with them. International economics is concerned with the interactions of nations through this wide range of economically relevant channels and studies their economic, social, and institutional determinants and consequences. Accordingly, international economics can be divided into subdisciplines: international trade, international finance (including the macroeconomic aspects of international trade and finance), and international factor movements. Each of these subdisciplines can be (and has been) approached from historical, theoretical, empirical, and political economy viewpoints. The study of the historical process of economic integration among nations, also known as economic globalization, borders these subdisciplines and bridges them with noneconomic disciplines with a view to producing a comprehensive interpretation of the waves of integration between nations as well as of international trade and financial institutions. The public debate on globalization, although often more ideological than informed by theoretical and empirical evidence, mirrors the large number of works in the various subfields of international economics that analyze the controversial aspects and consequences of free international exchanges and high economic integration. International economics covers those strands of the literature concerned with international financial and lending crises, global imbalances, and global inequality as well as with the implications of cross-border interactions for domestic economic phenomena (such as growth, financial stability, inequality, and welfare systems). Notably, to account for the complexity of the current economic relationships between nations, a consensus is emerging on the need of comprehensive approaches bridging the subdisciplines. Important phenomena, such as the process of European economic integration, the emergence of less developed countries, the propagation of financial crises, and the persistence of global imbalances, must be analyzed by taking into account that trade, monetary arrangements, financial flows, and migration are strongly related to one another. Acknowledgments: During the realization of this long article I accumulated enormous debts of gratitude to friends and colleagues who commented on its preliminary versions. In particular, I would like to thank Luigi Bonatti, Emanuela Ceva, Giorgio Fodor, Stefano Schiavo, Maria Luigia Segnana, Chiara Tomasi, Paola Villa, and Giuseppe Vittucci Marzetti. All mistakes, omissions, and oversights remain entirely mine.

Article.  40651 words. 

Subjects: International Relations

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