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.

Filter by
Sorted by
Tagged with
0
votes
0answers
14 views

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:...
1
vote
0answers
18 views

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 ...
1
vote
0answers
27 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 ...
0
votes
1answer
24 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 ...
0
votes
0answers
22 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 ...
1
vote
1answer
28 views

FDI - Foreign Direct Investment

If in the sector foreign direct investments (FDI) are not stable, for instance, increasing dramatically in one year, decreasing next year. fluctuation continues over ten years, what FDI can say about ...
0
votes
1answer
23 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 ...
0
votes
2answers
35 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.
0
votes
1answer
43 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 ...
0
votes
1answer
30 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 ...
0
votes
2answers
90 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 ...
1
vote
1answer
48 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 ...
0
votes
0answers
63 views

Intuition for factor price insensitivity in Heckscher-Ohlin

I'm trying to develop some intuition for why factor prices are independent of factor endowments in a small open economy (in a standard Heckscher-Ohlin 2x2x2 setting with diversification and no factor ...
1
vote
1answer
43 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: ...
0
votes
1answer
31 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 ...
1
vote
0answers
44 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 ...
0
votes
1answer
53 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,...
4
votes
1answer
470 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 ...
5
votes
2answers
60 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 (...
1
vote
1answer
74 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 ...
0
votes
1answer
53 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 ...
0
votes
1answer
79 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 ...
0
votes
0answers
8 views

What are the factors on which value of all resources ( good, silver, cash land etc. ) found in world changes over time?

And followed by, Does it right to say that, if any country become rich then other must become poor and vice-versa. If no, then Is it possible that, in certain conditions, all Nation in the world can ...
1
vote
1answer
18 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 ...
0
votes
0answers
11 views

What counts as a “dollar shortage” and how do we know which countries have one?

I recently read an article claiming that China is worried about a possible "dollar shortage," which is news to me. When does this happen, has it happened before, and how do we know which countries ...
1
vote
1answer
29 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 ...
0
votes
1answer
34 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 ...
0
votes
0answers
6 views

In simple terms, what does the bank liquid reserves to bank assets ratio indicate in terms of world development?

From this website: https://www.indexmundi.com/facts/indicators/FD.RES.LIQU.AS.ZS I am very new to economics/finance and I would appreciate an easier-to-understand explanation of this term
0
votes
3answers
112 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 ...
1
vote
1answer
31 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 ...
-3
votes
1answer
43 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.
2
votes
0answers
14 views

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?
0
votes
1answer
157 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....
0
votes
1answer
33 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 ...
1
vote
0answers
27 views

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 ...
-2
votes
2answers
78 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 ...
2
votes
0answers
9 views

Discrepancy of GDP and International Transaction Releases for Exports

The Bureau of Economic Analysis ("BEA") provides consolidated data from several different government agencies. Currently they provide exports under both a Gross Domestic Product ("GDP") release as ...
1
vote
1answer
24 views

Would PPP adjustments between countries be irrelevant if all countries had the same relative prices?

I'm trying to understand the relationship, if any, between the fact that countries have different relative prices (e.g. different 'food price-to-general consumer prices' ratios) impacts the need for ...
1
vote
1answer
27 views

Does a strong exchange rate always mean a cheap holiday regardless of where you are from and going?

As question title states, does going from one country with a much stronger exchange rate, or a moderately higher exchange rate, in comparison to a country you visit always mean you get more bang for ...
2
votes
2answers
111 views

Do sanctions work?

When countries commit "economic crimes" — i.e., theft of intellectual property, dumping, currency manipulation — are sanctions effective at making them stop? I am specifically looking for examples of ...
1
vote
0answers
177 views

What does an increase in REER signify?

What does an increase in the real effective exchange rate signify? I read from a news report that (localized for India): Furthermore, REER is calculated in such a way that an increase in its ...
0
votes
1answer
53 views

Greek Debt Crisis

If the Greek government defaults on its bonds issued by French and German investment banks, how does that prevent the French and German governments from paying back the money that they owe to ...
2
votes
1answer
87 views

Is there a measure of similarity for economies?

Is there a measure of similarity for economies? For example, I would like to find the world economies most similar to the UK.
2
votes
1answer
80 views

The Difference between investment and savings in CA identity

Mathematically speaking the current account is defined as: $$\text{CA}=S-I$$ where $S$ is savings and $I$ is investment. We know for a closed economy $S=I$ so $CA=0$. practically speaking for an ...
0
votes
2answers
33 views

Capital flight and interest rates

I am currently reviewing some stuff on capital flight and self-fulfilling crises. In this scenario, investors generally think that a low availability of reserves could imply that the central bank ...
1
vote
2answers
34 views

Theory of Optimal Currency Areas

Should a country be more inclined or less inclined to join a currency union (common currency) under the following events: a) Increase in the size and frequency of AD shocks to the economy. b) Increase ...
1
vote
0answers
118 views

J Curve and DD Schedule in the Short Run (International Finance)

Assume that the J-curve is true. What would the DD curve look like during the early period of the J-curve (where the value effect dominates)? What would the effect of temporary changes in monetary ...
0
votes
1answer
1k views

Does National Savings equal zero in a closed economy? Please give an economic intuition

Context: $Y -(C+I+G) = X - M$ In a closed economy, $(X-M) = 0$ Notations Y --> Income/Output C,I,G --> Consumption, Investment and Government expenditure respectively. X --> Exports M --> ...
5
votes
2answers
73 views

Why does the EU need a clearing centre to circumvent US sanctions against Iran?

As reported here and elsewhere, the EU is considering the creation of a clearing house to keep trading with Iran despite US sanctions. Why is it not possible for the EU to conduct normal financial ...
1
vote
0answers
40 views

how to find whether trade is possible between two nations [closed]

In the following image, we have U.S. and U.K. producing wheat and cloth in bushels/hour and yards/hour respectively. In all cases except in case D, given in the figure, trade is possible between ...