ABSTRACT
It is appropriate to begin this part of the book with a presentation of the Mundell-Fleming (MF) model which is easily the best known and most widely used model of the open macro economy. It is fair to say that, over time, it has assumed the role of a reference point against which other models have been compared. The basics of this model are now taught in most universities in first- and second-year macroeconomics courses; it should therefore be familiar to students who have advanced to that point (see Fleming 1962; Mundell 1963a).
