Keynes’ (1936) General Theory of Employment Interest and Money1 is developed primarily in a closed economy context. Keynes did, however, introduce an open economy analysis when he noted that:

1 trade could modify the magnitude of the domestic employment multiplier (120);

2 reductions in money wages would worsen the terms of trade and therefore reduce real income, while it could improve the balance of trade (263); and

3 stimulating either domestic investment or foreign investment can increase domestic employment growth (335).