Explaining Global Macroeconomic Events

Abstract

While economic theory may be fascinating in its own right, it becomes much more compelling when it can be used to help analyse and explain real events. In this chapter we briefly examine a series of global economic events that have occurred since the 1970s to see what international macroeconomic theory has to say about them. In order, these are the oil crisis of the 1970s, the developing country debt crisis of the 1980s and related issues associated with the value of the US$, the global economic recession of the early 1990s, and the Mexican peso crisis of the mid 1990s. The following chapter then examines the crisis in the Exchange Rate Mechanism of the European Monetary System in 1992 and 1993, and Economic and Monetary Union (EMU) in Europe. As things move along, other aspects of global macroeconomic performance will also be highlighted to throw into sharper relief some of the issues that have been raised in earlier sections of this book.