Introduction -- The gains from trade -- Applications of the basic model -- Technology and international income distribution : the ricardian model -- Factor endowments and trade I : the specific factors model -- Factor endowments and trade II : the Heckscher-Ohlin model -- Imperfect competition, increasing returns, and product variety -- Resource trade, outsourcing, and product fragmentation -- International factor movements : labor and capital -- Protection and the national welfare -- The political economy of protection -- Trade policy and imperfect competition -- Trade controls in practice -- Preferential arrangements and regional issues in trade policy -- The balance of payments accounts -- The foreign exchange market and trade elasticities -- National income and the trade balance -- Spending and the exchange rate in the Keynesian model -- The money supply, the price level, and the balance of payments -- Developing countries and other small open economies with nontraded goods -- The globalization of financial markets -- The Fundell-Fleming model with partial international capital mobility -- Fiscal and monetary policy under modern financial market conditions -- Crises in emerging markets -- Interdependence and policy coordination -- Supply and inflation -- Expectations, money, and the determination of the exchange rate -- Exchange rate forecasting and risk.