Economic Disturbances and Equilibrium in an Integrated Global Economy: Investment Insights and Policy Analysis

Economic Disturbances and Equilibrium in an Integrated Global Economy: Investment Insights and Policy Analysis helps readers develop a framework for analyzing economic events and make better, more consistent decisions. Victor Canto presents the theoretical building blocks that make up the overall framework, then expands the framework to tackle more complex problems, applying additional considerations to actual policy or investment issues. Drawing upon the most recent trends in monetary policy and international economics, the book offers sustained direct engagement with the main research question and makes innovative use of the simple concepts of supply and demand to illuminate modern finance literature.

The book succeeds by highlighting the often-forgotten interconnectedness of different economic processes. How do we respond to a change in policy or an economic shock? Are all the expected changes to the general equilibrium consistent with each other?

Helps readers build an intellectual framework that enables them to interpret articles in the financial press and policy decisions in a logical and consistent manner Differs from other books by eschewing partial equilibria analyses and instead providing a general equilibrium perspective useful for investors and policy makers Provides supporting data on a freely-accessible website so readers can test and replicate results

Introduction: Asset Allocation: Indexing, Smart Beta and Value Timing

Part I: Arbitrage and Mobility 1. Arbitrage, Mobility and Equilibrium Price 2. The Investment and Policy Insights and Implications Derived from Arbitrage and Mobility 3. Are Commodity Price Increases Equivalent to Tax Increases? 4. The Terms of Trade 5. Yields, Risk Premium, and Terms of Trade 6. The Competitive Economic Environment: Lessons from the States 7. Economic Policy and Performance: The Small-Cap and Country Effects 8. Migration: A Political Problem, an Economic Problem, or Both?

Part II: The Trade Balance 9. The Macro Perspective 10. Diversity and Harmonization 11. The State Competitive Environment: Integration and Convergence 12. The Degree of Global Integration and National Economies’ Policy Options and Limitations 13. A Unified Theory: The Terms of Trade, Real GDP Growth Rate Differentials, Trade Balance, Capital Flows, and Relative Stock Market Performance

Part III: Exchange Rate and the Terms of Trade 14. Protectionism, Devaluation, and the Terms of Trade 15. Exchange Rates, Devaluations and the Terms of Trade 16. The Nominal Exchange Rate, the Terms of Trade, and the Economy 17. The U.S. Experience: An Interpretation 18. Relative Price Changes, Income Redistribution, and the Politics of Envy 19. Self-sufficiency, Nationalism, and Protectionism: The Common Elements 20. Mercantilism Does Not Make for Good Economics

Part IV: The Balance of Payments 21. Building Block IV, Global Investing the Balance of Payments 22. Monetary Views: Part I 23. Monetary Views: Part II 24. The Greenspan Monetary Rule 25. Transparency and Rule-Based Monetary Policy 26. A Single or Dual Mandate? 27. The Demise of the Global Price Rule 28. The U.S. Inflation Rate 29. The Exchange Rate and Rest of the World Inflation

Part V: China--A Case Study 30. China in a Global Economy: An Interpretation 31. Examining China: Wealth, Income, and the Savings Rate 32. Examining China: Purchasing Power Parity, Terms of Trade, and Real Exchange Rates 33. Examining China: Economic Growth, Exchange Rates, and Relative Stock Performance 34. Examining China: Monetary Policy, Inflation Potential under a Floating Exchange Rate System 35. Examining China: Monetary Policy, Inflation Potential under a Fixed Exchange Rate System 36. Examining China: As a Non-Reserve Currency Country