Teaching International Monetary Economics. Two different views

Luca Fantacci, Lucio Gobbi and Stefano Lucarelli

No 2019/7, DEM Working Papers from Department of Economics and Management

Abstract: This paper presents a critical analysis of the way in which international monetary economics is normally taught. The objective of this paper is twofold. On the one hand, we show how the most popular international economics manuals deal with exchange rate theory and its link with balance of payments equilibrium. In particular, we stress how the models proposed in these manuals cannot explain one of the biggest macroeconomic problems of our time, that of the imbalances of the balance of payments. On the other hand, we put forward an alternative Keynesian model. Assuming neither full employment nor balanced trade over the short or long run, the paper is intended as a new contribution to the post-Keynesian analysis of exchange rate theory. Finally, our model gives an original insight into the relationship between Liquidity Trap and structural economic imbalances in modern economies.

Keywords: international monetary economics; exchange rate determination; endogenous money; global imbalances; post-Keynesian economics (search for similar items in EconPapers)
JEL-codes: A20 B50 E12 F41 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-hpe, nep-mac, nep-mon, nep-ore and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:trn:utwprg:2019/07

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