1. Global markets in goods, services, and assets have become increasingly integrated.
2. To understand macroeconomic performance we must therefore study the links between countries, their currencies, trade in goods and services, and capital flows between them.
3. Using these tools we can understand macroeconomic phenomenon such as currency fluctuations, currency crises, global imbalances, problems in policy making, and the growing gap between rich and poor countries.
Today’s global macroeconomy is an economic system characterized by increasingly integrated markets for goods, services, and capital. To effectively study macroeconomic outcomes in this context, we must understand the economic linkages between different countries—their currencies, their trade, their capital flows, and so on. Only then can we begin to understand some of the most important economic phenomena in the world today, such as the fluctuations in currencies, the causes of crises, the determinants of global imbalances, the problems of economic policy making, and the origins of the growing gap between rich and poor countries.