The monetary approach to international adjustment

Recent Books tions in 1974-1975) is to identify key issues and provide quantitative information on trade and employment effects. The Michigan Model of World Production and Trade has been written as a practical tool for analyzing trade policy. Deardorlf and Stern continued their study in order to clarify and elaborate on its theoretical structure, explore alternative solution procedures, and assess the likely employment impact in industrialized countries. The model (updated with 1983 data inputs) includes a full general-equilibrium analysis of goods markets, holds wages and expenditure fixed, while permitting labor markets to be in disequilibrium. It also assumes that capital is fixed, labor is the only variable production factor, and perfect competition is present in all markets. The Monetary Approach to International Adjustment. Bluford H. Putnam and D. Sykes Wilford, eds. New York: Praeger Publishers, 1986. 381 pp. No price available. ISBN 0-275-92024-O (ISBN 0-275-92050-X paperbound). This book moves away from the balance of payments theories that evolved from the Keynesian revolution back toward the economic theories of Hume and Smith. Presented is a collection of essays that discuss basic theory of the monetary approach to international adjustment, trace its historical origins, demonstrate its empirical relevance, and extend basic theories into complex forms. Part One focuses on fixed exchange rates, followed by a discussion on flexible exchange rates in Part Two. Currency substitution is discussed in Part Three, and the volume is completed with policy debate in Part Four. Contributors challenge old and new theories alike, while they seek to further understand, as well as enlighten readers, how the international economic system functions. Money, Finance, and Macroeconomic Performance in Japan. Yoshio Suzuki. New Haven, CT: Yale University Press, 1986. 218 pp. $22.50 ISBN o-300-03387-7. As director of the Bank of Japan’s Institute for Monetary and Economic Studies in Tokyo, Yoshio Suzuki is one of the best possible sources to explain Japan’s institutions and economic policies. In Money, Finance, and Macroeconomic Performance in Japan, he analyzes Japan’s financial institutions and monetary policy since 1973 when the transition to a floating exchange rate system and the first oil crisis altered Japan’s economic history. This book presents the effects of money on both aggregate demand and aggregate supply, using both microstructural techniques of general equilibrium models 640