ABSTRACT

A graphical technique that is widely used in domestic macroeconomics can be readily extended to an open economy framework. It allows a somewhat more rigorous, if still oversimplified, analysis of the effects of various policies designed to produce payments adjustment. For students who have had an intermediate macroeconomics course, the purely domestic portion of what follows will probably not be new, and even part of the international extension may be familiar. For those who have not been introduced to these graphs, an introduction follows.