Questions tagged [international-economics]

Use for questions related to international trade, commercial policy, open economy macroeconomics, international finance, and exchange rates. It can also be used in financial and monetary policies, economic development, migration and factor movements, as long as they are specifically related to an international context. Preferably use in conjunction with other, more precise tag.

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19 views

Relationship between stock market and exchange rate

I am looking for some references on the relationship between the stock market and the exchange rate, both from the empirical and theorical side. Is there any theory which suggests a relationship ...
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56 views

Is Reinhart and Rogoff mistake also present in similar 'minded' studies?

In Reinhart and Rogoff (2010), the authors purported to have found empirical evidence that going over the 90% of public debt threshold was harmful for the country. However, in 2013 (I think), after ...
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Shifts in IS in a fixed exchange rate mechanism

First, we assume we are in a fixed exchange rate mechanism. In this system, I deduce that the expected exchange rate would be fixed, at the market rate. In a floating system, with open capital markets,...
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34 views

non strategic sovereign default

Much of the sovereign default literature (e.g., Arellano (2008), Bulow and Rogoff (1989)), considers that sovereign default is strategic: i.e., defaults occurs if the current benefits outweigh ...
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1answer
73 views

What are the differences between “Crawling peg” and “Crawl-like arrangement”?

The IMF AREAER 2019 classifies 3 countries as "crawling" and 18 as "crawl-like". It's not clear to me though how these classifications were made and why they couldn't be switched ...
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19 views

Does IMF consider the international reputation of a country?

Hi I have three question below which I tried searching on internet and read a lot of literature as well. Besides all the literature sources I need to know some practical knowledge of people out there. ...
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20 views

What would happen to Eurozone and EU if Italy defaults on its debt?

Question What would happen to Eurozone and EU if Italy defaults on its debt? Background & disclaimer This direct question is an attempt to amend the more expanded question. Given that this ...
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Does the US Federal Government keep public records of annual service payments on external (foreign-owned) public debt?

I'm doing some research on international debt policy, and I'd like to be able to compare some statistics I've compiled of external public debt in HIPC (heavily indebted and poor countries) with the ...
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1answer
34 views

What would be the impact on value of a country's assets and trade balance if its residents choose to increase their savings [duplicate]

What would be the impact on value of a country's assets and trade balance if its residents choose to increase their savings by investing in overseas assets and why? May please help with this question ...
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1answer
18 views

Price convergence in international markets?

Why do prices tend to converge towards the pre-trade prices of the larger country when two countries trade based on comparative advantage?
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1answer
163 views

What is the difference between the international Fisher effect and uncovered interest rate parity?

References: https://en.wikipedia.org/wiki/International_Fisher_effect https://en.wikipedia.org/wiki/Interest_rate_parity#Uncovered_interest_rate_parity As far as I can tell, these two are the same. ...
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graph of dependent variable after years of restructuring in panel data

i'm not very able to use stata. For my thesis, I have a panel data(1970-2017) for different countries and a lot of variables. In this dataset, there is a dummy (dhairendH) that is equal to one in the ...
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unit iso-quant curve and unit iso-value line

This question is about international trade theory. For the labor L and capital K, I know the theory of iso-quant and iso-cost. The price will be determined where iso-cost line touches iso-quant curve. ...
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1answer
53 views

Understanding IMF statistics

I teach Politics and I've been asked to prepare a course which includes a lot of financial data because it covers recent international financial crises. I've been trying to use IMF statistics, but I ...
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1answer
44 views

What does it mean, 'Higher interest rates attract FIIs and FPIs'?

What would interest rates have anything to do with shares? When we say a higher interest rate attracts FII/FPI, does it not mean it is investing in shares of a company? For example, how does it help a ...
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1answer
39 views

Monopsony theory of Single Payer

One theory of how single payer/universal healthcare systems are less expensive than the US private insurance market is that each country functions as a monopsony: a market structure in which a single ...
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2answers
48 views

How to estimate Italian parking data starting from German parking data?

I am currently investigating the economic impact of the parking pain in Italy. I have just found out this INRIX Research which is absolutely stunning, but it only focuses on US, UK and Germany market. ...
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31 views

Biggest foreign owners of China debt?

It is already known that China and Japan are the biggest owners of US debt - about one trillion dollars each. But who are the biggest owners of China debt? I mean the foreign owners.
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Relative demand curve in Ricardian models

In many expositions of the Ricardian model, a relative demand curve is used. For example, consider the figure here: https://en.wikipedia.org/wiki/Comparative_advantage#/media/File:...
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How do you perform economic analysis of a country? [closed]

I have no academic background in economics except for one class I took in engineering school. In this recent crisis of coronavirus, I would like to know how my country is doing overall and how deep in ...
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30 views

Exchange rate modeling using a system of ODEs

I am looking for a book that explains exchange rates, capital flows, reserves, trade balance using a system of ordinary differential equations. An economist by the name of Muller-Plantenberg has this ...
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1answer
35 views

Financial Economics and International Economics

What is the difference of Financial Economics and International Economics? Why, How? What are the implications of these differences? Will a model of international economics suddenly become a model of ...
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23 views

How does the trade problem in Ricardian model of int'l trade work?

Sorry if this question seems fragmented; I have minimal background in economics, I just grabbed some notes and began studying. The scenario is given as: "Suppose Germany needs to make a 1 billion ...
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1answer
50 views

FDI - Foreign Direct Investment

If foreign direct investment (FDI) in a sector is not stable, for example, if it increases dramatically one year and then declines the following year. If the fluctuation continues over ten years, what ...
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1answer
25 views

How are PPP, nominal exchange rates and inflation related?

This Forbes article discusses how changes in the market exchange rate can be used to estimate an inflation rate thanks to the principle of purchasing power parity (PPP). Can someone distill this ...
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2answers
369 views

What does it mean if a country's exchange rate is said to be “overvalued”?

For instance, China's or Switzerland's currencies are often said to be overvalued.
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47 views

Why do we have autarky price of mud pies equal to 0.5 of cheese, while it must be zero?

(It's assumed that we work with the Ricardian model) Absurdtopia is an autarky. Production of 1 mud pie requires 1 labor, while production of 1 cheese requires 2 labor. We know that price of 1 mud pie ...
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1answer
31 views

Which one of these intepretations of belonging of a factor of production is correct in context of calculating “income of our citizens abroad”?

NFFI can be calculated as income of foreigners here MINUS income of our citizens/corporations abroad. As far as I understand, it's assumed that our citizens earn income by using OUR factors of ...
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2answers
99 views

Do I make correct conclusions about international trade (and ways to increase GDP) from the expedenture approach formula for GDP?

(Please correct me if my reasoning is wrong somewhere) Net Exports is a part of GDP and consequently its increase or a decrease also causes GDP to increase or decrease, assuming everything else stays ...
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1answer
74 views

Current Account vs Net Exports

In Mian, Sufi and Verner (2017), the authors look at the impact of an increase in household debt on both net exports and the current account, and find a significant negative coefficient in the ...
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1answer
59 views

How exactly did Venezuela's economy fail?

Venezuela has unfortunately become the example of a first-world, wealthy democracy failing, and I'd like to make sure I understand why. My understanding comes down to a few major steps, namely: ...
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1answer
36 views

What does it mean by Global recession?

I am bit curious to understand what it actually means when I read global recession is coming soon. There are some questions which pop in my mind reading such news. Some of them are: What causes ...
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53 views

Is it possible that all countries become developed and rich? [duplicate]

In economics, we are taught that, or needs are infinite and resources are fixed. And each needs and resources have some associated value.. At global level, we know, there are some rich as well as some ...
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1answer
57 views

Is there a country in the world not in debt?

This morning I read the following article: https://www.bbc.co.uk/news/business-49961301 It got me thinking, is there any country in the world not in debt? I am aware that debt is good for a country,...
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1answer
2k views

Bretton Woods vs Gold Standard

I've been reading about the history of the IMF recently, and it strikes me as odd that despite the problems that arose with the gold standard (Germany in the 1920s, Fed cutting money supply during the ...
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82 views

Alternatives to avoid sanctions

Recently we saw that the EU and Iran devised an instrument called INSTEX to avoid dealing in U.S. dollars and, hence, avoid U.S. sanctions. Similar thing is being planned between India and Russia (...
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1answer
94 views

What is the upper limit of circulating money on earth?

I've come up with this question while discussing the topic of customer-perceived value with coworker. Is there a theoretical upper limit to all circulating money in this world? To avoid inflation ...
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1answer
55 views

Who paid the bill for cheap Chinese exports?

We have all enjoyed the flow of cheap Chinese imported goods, whether in the shops, or online. The shipping costs from China have always seemed very low. Now I see this note: Got notification today ...
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1answer
95 views

Derivation of aggregate demand function for Monopolistic Competition (based on Combes et. al, 2008)

A specialized question for those, who excel in monopolistic competition and modern trade theories. I am interested in a derivation of an aggregate demand function for a model of monopolistic ...
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1answer
31 views

Interpretation of the World Bank's definition of Portfolio equity inflows

The following is the definition from World Bank: Does it imply that apart from FDI, portfolio equity includes net inflows from equity securities including shares, stocks, depository receipts and ...
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1answer
36 views

Name of phenomenon where migrant workers receive decent wage but absolutely no chance of getting any government benefits

Not sure if the title reflects the question very accurately but my question is specific to the Gulf countries which have a huge population of migrant workers, like Saudi and UAE. So, let's say Raj is ...
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1answer
46 views

What happens if the Central Bank does not absorb a BOP deficit/surplus?

The basic principle of BOP accounting is double entry bookkeeping. In short, every transaction enters twice. As a consequence of this, by definition $$\text{Current account } (CA) + \text{Capital ...
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3answers
119 views

Why Turkey's president thinks that by cutting interest rate it will lower inflation?

Recently, President Erdogan sacked the head of Turkey’s central bank because he didn't want to cut interest rates. He even said: “We said that if rates fall, inflation will fall. He didn’t do what was ...
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1answer
36 views

Monetary Approach to a depreciating currency

I am currently doing some research on the monetary approach to the effects of currency fluctuations on trade balance. It's been a while since I took an int econ class back in the undergrad, so I hope ...
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1answer
45 views

Why did no US politician start the trade war a decade earlier with China or possibly the Globe if it is a good thing to do? [closed]

Why did no US politician start the trade war with China (or possibly the Globe) a decade earlier if it is a good thing to do? I am asking for a list of reasons for why not.
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The range of subsidies that underpin China’s economic model

I was watching the news the other day and the reporter said that America was complaining about "the range of subsidies that underpin China’s economic model". What exactly are those subsidies?
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1answer
354 views

Why are mortgage rates in USA so high compared to Europe?

What are the main reasons of high mortgage rates in USA compared to central Europe? In central Europe mortgage rates are about 75%-100% lower than in USA. For data on mortgage rates see: https://www....
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1answer
39 views

Utility functions of countries

In international relationships, often the interacting agents are countries. For example, countries negotiate, sign agreements, give loans to each other, trade, etc. Thus it is interesting whether ...
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Do countries have an obligation to match their savings and consumption rate with that of the U.S.?

https://www.barrons.com/articles/europe-is-now-a-bigger-trade-villain-than-china-51558118723 The above articles state that trade imbalances are a bad thing and that if a government doesn't enact ...
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2answers
80 views

Are currencies equilibrating?

I was travelling recently and realised that dollars, euros, British pounds and Swiss francs all have more or less the same worth (i.e. 1 dollar $\cong $1 pound $\cong$ 1 euro $\cong $ 1 chf). This was ...