This volume brings together 12 essays on macroeconomic policy in the open economy. The subject matter is divided equally between analyses of the internal and external adjustment problems of small open economies and studies of the behaviour of large interdependent countries.

Part I Monetary and discal policy in a single open economy: saddlepoint problems in continuous-time rational expectations models - a general method and some macroeconomic examples; monetary policy and international competitiveness - the problems of adjustment; oil, disinflation, and export competitiveness - a model of the "Dutch disease"; monetary and fiscal policy with flexible exchange rates; structural and stabilization aspects of fiscal and financial policy in the dependent economy. Part 2 Modelling the global interdependent economy: international monetary policy to promote economic recovery; macroeconomic policy design in an interdependent world economy - an analysis of three contingencies; time preference and international lending and borrowing in an overlapping-generations model; fiscal policy in open, interdependent economics; policy decentralization and exchange rate management in interdependent economies. Part 3 Fiscal aspects of managed exchange rate regimes: borrowing to defend the exchange rate and the timing and magnitude of speculative attacks; a viable gold standard requires flexible monetary and fiscal policy.