Working with the Feenstra and Taylor International Macroeconomics Textbook
This is one of the more common textbooks used in upper-level international macro courses. It covers exchange rates, balance of payments, open-economy policy, and currency crises using the standard IS-LM-BP framework before moving into more advanced material. If you're struggling with the problem sets or trying to actually understand what's going on rather than just memorizing diagrams, here is how I approach it. I used this book for a semester covering floating exchange rate regimes and the Mundell-Fleming model. The chapters on the monetary approach to the exchange rate and the asset market approach are where most students hit a wall. The math isn't hard but the intuition takes some time to click because the book assumes you already know how to move between stock and flow variables comfortably. Don't read it cover to cover like a novel. The first three chapters are pretty straightforward if you've taken intermediate macro. Chapter 4 on the balance of payments is where you need to slow down because every chapter after that builds directly on how the current account and capital account interact.
The problem sets at the end of each chapter are worth doing even if you skip some of the derivations. I found that working through at least half of them gave me enough muscle memory for the graphs and equilibrium shifts. The textbook has maybe two hundred problems total across its seventeen chapters, and picking about fifty to eighty of them spread across the whole book covers the material well enough for most exams.
A Specific Problem I Ran Into
During my second semester using this text, I was working through Chapter 9 on currency crises and the second-generation models. The book presents the multiple equilibria framework but doesn't explain clearly why the self-fulfilling speculative attack mechanism breaks down when you introduce a realistic fiscal feedback loop. I got stuck on problem 9.4 for nearly two days because the answer key's approach assumed a simplified government budget constraint that wasn't stated anywhere in the chapter. The workaround was going to the companion website that Feenstra and Taylor maintain. They have a section with worked-out solutions and occasionally extended notes that clarify assumptions the main text skips over. The online supplement for Chapter 9 includes a appendix on how the fiscal side changes the critical threshold for a crisis. Without that, the problem is essentially unsolvable with just the book.
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Common Pitfalls Students Keep Making
Students tend to confuse the Marshall-Lerner condition with the J-curve effect. The Marshall-Lerner condition tells you whether a depreciation will improve the trade balance in the medium run. The J-curve explains why the trade balance actually gets worse immediately after a depreciation before improving. These are different time horizons and the book covers them in separate sections, but exam questions routinely combine them. Another issue is treating the flexible-price oversimplified version of the exchange rate model as if it applies to actual short-run data. The book does a decent job of acknowledging this limitation, but students miss it when they memorize the equations without noting when the price flexibility assumption is supposed to hold. In practice, sticky prices matter for anything under a year, and the textbook's early chapters work best as building blocks rather than complete descriptions of reality.
What the Book Gets Wrong About Itself
The 2011 edition is dated in several ways. It doesn't cover the eurozone crisis thoroughly because that was still unfolding at publication. If you're studying currency crises with this book, you should supplement it with some newer material on the European sovereign debt crisis. The core models haven't changed but the real-world examples are stale. Also, the coverage of emerging market economies is thinner than it should be. The case studies focus heavily on advanced economies and a few Latin American examples. If your course emphasizes Asian or African macro, you'll need additional readings. The framework itself works fine for those regions but the empirical illustrations don't reflect current conditions.
Supplementary Resources That Actually Help
Besides the companion website, the solutions manual is useful but I'd recommend using it selectively. Looking at full solutions for every problem makes it too easy to just copy the steps without doing the work. Pick the problems you find genuinely difficult and check those. For visual learners, watching lecture recordings from professors who use this book helps. MIT OpenCourseWare has a course that maps closely to the chapter order, and it fills in gaps the textbook leaves around the portfolio balance approach and interventions in foreign exchange markets. If you want something more applied alongside Feenstra and Taylor, Krugman's International Economics also covers similar material with different examples. It's not necessary but it reinforces concepts when the textbook explanation feels too abstract. Some people find Krugman clearer on the exchange rate determination chapters while others find the opposite. It depends on what clicked for you during lectures.
Bottom Line
The book is solid for what it does. It's not the most intuitive text you'll find on the topic, and it assumes a level of mathematical maturity that some undergraduates haven't fully developed yet. But the organization is logical, the problem sets are reasonable, and the chapters on monetary models and balance of payments are among the better treatments available at the undergraduate level. The main things to watch out for are the dated case studies and the occasional gap in assumptions that the solutions manual or supplementary lectures can fill in.
