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This new macroeconomics text deals entirely with Open Economy Macroeconomics, reflecting a concern to understand macroeconomic principles and applications in the context of the open economies of Western Europe and the rest of the world. It is also distinctive in providing an exposition and evaluation of the three main macroeconomic models, the income-expenditure model, the IS-LM model and the AD-AS model, in addition to the application to real world issues and policy. Finally the AD-AS framework provides an opportunity for examining recent controversies concerning the supply-side, growth and business cycles. In summary this is a macroeconomics textbook which provides a new framework for understanding contemporary macroeconomic theory, policy and applications.