1 Introduction -- 2 Stylised Facts -- 2.1 Matching on the Labour Market and Unemployment -- 2.2 Trade and the Terms of Trade -- 3 A Two-Sector Search Model of an Open Economy without Capital -- 3.1 The Reference Model of Risk-Neutral Individuals -- 3.2 International Trade and Exchange Rate Shocks in the Medium Run -- 3.3 The Evolution to the New Equilibrium - The Adjustment Process -- 3.4 The Economy with Risk-Neutral Individuals and Individual Bargaining -- 3.5 Appendix A -- 4 The Generalised Model: An Open Economy with Risk- Averse Individuals -- 4.1 Individual Bargaining with Risk-Averse Individuals -- 4.2 The Effects of a Terms-of-Trade Shock on an Economy with Risk-Averse Individuals -- 4.3 The Economy with Risk-Averse Individuals and Individual Bargaining -- 4.4 Appendix B -- 5 An Open Economy with Industry-Level Bargaining -- 5.1 Trade Unions in Economic Models -- 5.2 Wages under Collective Bargaining -- 5.3 Trade Unions in an Open Economy -- 5.4 The Economy with Risk-Neutral Individuals and Collective Bargaining -- 5.5 An Illustrative Numerical Example of Risk Neutrality, Risk Aversion, and Collective Bargaining -- 5.6 Appendix C -- 6 A Simple Matching Model of a One-Sector Economy with Capital Accumulation -- 6.1 The Individual's and Firm's Decision Problem -- 6.2 The Equilibrium with Capital Accumulation - The Long-Run Perspective -- 6.3 Appendix D: The Wage Agreement -- 7 Summary -- List of Symbols -- List of Figures -- List of Tables -- Author Index.