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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Increasing Returns to Scale and Perfect Competition
Increasing returns to scale due to internal economies are incompatible with perfect competition BUT increasing returns to scale due to external economies are compatible with perfect competition
SOURCE:...
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What downside is there to making the USD the national currency for your country?
I get that for huge countries like China, you can't have the US controlling your currency.
But for some smaller countries, or new fledgling countries, why not have the USD be your national currency? ...
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Does it make sense to evaluate a country's debt in GDP based on PPP?
Consider a fictional country Gudzan-Tservijstan with a GDP of \$100bn USD, a total (public and private) debt of \$100bn USD, and a PPP conversion factor of 2.
Are there advantages to considering the ...
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Is there a global flow of income?
If I understand the circular flow of income correctly, we can visualize money moving around the country in exchange for goods and services. Sources of money are the central bank (MB) and the financial ...
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Did both the U.S. and Zimbabwe economically benefit from dollarization?
Mugabe's leadership of Zimbabwe was harshly criticized by the U.S., citing human right abuses and economic mismanagement. Consequently, the U.S. congress passed the Zimbabwe Democracy and Economic ...
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What are some good alternative textbooks in international trades for undergraduates other than 'Taylor & Feenstra' and 'Krugman, Obstfeld & Melitz'?
I've been referring to the textbooks International Economics by Alan M. Taylor and Robert C. Feenstra and International Trade: Theory and Policy by Marc Melitz, Maurice Obstfeld, and Paul Krugman ...
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What is the logic behind Krugman's argumentation about dumping?
I don't quite understand what he is trying to say. As I see it, a lower marginal cost should lead to an increase in export prices, not the opposite.
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Is there a term for an international market in which firms cannot break even without subsidisation?
There are (and have historically been) various sectors whose firms frequently receive subsidies from their home government, for instance because they are perceived as "strategic". Is there ...
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Why are subscriptions to the World Bank's IBRD measured in 1944 US dollars? How is this calculated?
Several official documents published by the World Bank's 'International Bank For Reconstruction and Development' (IBRD), such as https://pubdocs.worldbank.org/en/795101541106471736/...
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Euler Equation - small open economy
How would I find the Euler equation for:
$$ U=\sqrt{C_1}+\beta{\sqrt{C_2}} $$, where $$\beta=1/(1+r)$$
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Why does not Uncovered Interest Parity hold exactly? Or does it?
I am using the UIP condition before taking an approximation and, therefore, expecting UIP to hold exactly.
I want to understand why UIP calculated for a pair of currencies
a) does not hold exactly (...
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International Spillovers of environmental policies
I'm trying to put together a literature review of papers tackling the international spillovers of environmental policies, particularly theoretical contributions. I haven't been able to find much.
Any ...
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Questions regarding Solving Melitz (2003) model
I am editing my question regarding solving the model in order to be more specific.
Regarding the demand side, In the beginning of the model, we have a CES utility function over a continuum of goods
...
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Recently China increased the import quota on crude oil to 20% from last year. Why would they do that? What will be its impact on the economy?
Can someone explain why? Because I thought it had to something with increasing domestic market competition but I am very confused. Any help would be appreciated.
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What actually is comparative advantage?
Is comparative advantage determined by simple productivity? In other words, a production function that takes in... some kind of input, uses labor, and capital, and produces an output? In this case, is ...
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Deflators for global GDP
I have annual global GDP in 2015$ prices (i.e. the chart here: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD). If wanted to change the price base year here, say 2015, what deflator series to I ...
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Covered interest rate parity: the forward contract is not risk free
Covered interest rate parity (CIRP or CIP) can be formulated as:
$$
(1+r_{f,Home})=\frac{S_0}{F_{0\rightarrow 1}} (1+r_{f,Foreign})
$$
where $r_f$ are risk-free rates in the home and foreign countries,...
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Can someone explain why sterling-dollar parity is bad?
Please forgive the probable naivety of this question. I am not an economics student I am just trying to understand the currency fluctuations that are currently occurring with GBP as a result of our ...
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How does high external debt hurt GDP?
Really confused by this. Say debt burdens increase and country A now has to spend more of its income towards servicing its debt to country B, causing a fall in consumption. Country B now has more ...
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Why does the government spending increase by the "same" amount as the demand?
I know that governments can increase demand by increasing employment, transfer payments, and capital for the private sector.
Why does government spending increase by the ""same"" ...
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Why doesn't the consumption function include savings?
Why doesn't the consumption function C=C(Y-T) include transfer payments?
If we assume that C=MPC(Y-T), and that the MPC assumes that one part of the increase of income goes to savings. But what about ...
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Why is the 'marginal productivity of a factor' of any relevance in the Cobb-Douglas production function?
I don't understand its importance in this production function.
I know that the productivity parameter is A in the function:
F(K;L)=AK^α L^(1-α)
So what could it be?
Thank you!
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In the Cobb-Douglas production function, why do K and L have these effects?
Why does an increase in K lead to an increase of MPL, and to a decrease of MPK?
Likewise, why does an increase in L lead to a decrease of MPL, and to an increase of MPK?
Thank you.
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Why is it Y=F(K,L), and not Y=F(K,L, Economic profit)?
Initially, we have the distribution of income:
Y = MPLxL + MPLxK.
But, when the economic profit = 0, we have constant returns to scale. And since, input=output, if I am not mistaken, there is just ...
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Why is inflation higher in emerging economies?
Inflation rates are higher in emerging economies than in developed economies.
(source)
Why is that so ?
Most explanations I have found refer to some kind of catching up, but it does not immediately ...
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How to have the yearly index when having monthly index?
From (Benigno, 2022) I have an index called Global Supply Chain Pressure Index (GSCPI) provided at the end of the post. The index was shared at monthly frequency.
A part of the data provided is as ...
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Perception of value between different currencies
So let's say I am going to sell a game and I'm trying to come up with a fair price.
The thing is, I am from Brazil and I'm selling in an online platform where most products are priced in dollars.
The ...
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Why Developing countries, especially exporters are most vulnerable to strong US Dollar?
Developing countries, especially exporters such as Argentina and
Turkey, are among the most vulnerable, says Harvard economics
professor Jeffrey Frankel.
Excerpt from: https://www.bloomberg.com/news/...
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How to convert national poverty into an international comparable measure?
I want to compare the poverty of a subpopulation of my country (indigenous people) to other countries' poverty. To do that, I have the per capita income of each individual of my dataset expressed in ...
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Foreign Currency Reserves: Profit / Loss from Foreign Currency Depreciation / Appreciation?
From Wikipedia article on foreign exchange reserves:
The central bank may, however, profit from a depreciation of the foreign currency or incur a loss on its appreciation.
Why does the depreciation ...
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Does culture effect micro economics?
In different parts of the world, we have different attitudes to money , spending and value different things importantly. Does this mean that we require different micro Economic theories which are ...
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Inflation or CPI times CURRENCY/DOLLAR rate?
Is there a database which follows the inflation or cpi MULTIPLIED by the forex rate. In order to calculate the change in cost of living around the world relative to ONE, NORMALISED base currency, ...
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How do economic sanctions work? How do they not create an arbitrage opportunity?
(Not sure if this should be on Politics.SE)
This is something I've been thinking about since the Russian invasion of Ukraine. Many countries enacted sanctions on Russia in response.
Let's say one of ...
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Why does a stronger US dollar translate to potentially lower sales and earning for Microsoft?
A recent headline stated:
"Microsoft Corp. cut sales and earnings guidance for the fourth
quarter, citing unfavorable foreign exchange rates as the stronger
U.S. dollar takes a toll."
...
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Are Estonia, Iceland, Hungary and Greece in a similar economical level?
I was wondering whether the Estonian or the Icelandic economies, despite being small, are relatively close to the Hungarian and the Greek economies, or whether they are much smaller
Therefore, are ...
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Why does Russian ruble conversion rate to USD remains constant at 1 to 0.01?
I've been noticing that since Russian ruble started losing its value compared to other foreign currency, at some point it became at constant exchange rate of 1 RUB to 0.01 USD.
That is, every day no ...
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Most innovative business model for companies today
I am not sure if this is the right place to ask questions on this topic, but My class on International business has been asked to present a business plan that will work in the international market, ...
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Is Bank for International Settlements still providing financial services to Afghanistan?
After the Taliban takeover of Afghanistan in August 2021, most of the major central banks such as the Fed, Bank of England, and Bundesbank froze FX reserves of the Afghan central bank (DAB). As of ...
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Is foreign aid loans?
I see that America is giving tons of foreign aids. Is that loans?? Or just money without expecting any returns?? Help me understand the loans given to other countries and aids.Also during military ...
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Which industries are widely agreed upon to require central regulation on a national basis, regardless of economic or political system?
For example, the most straightforward cases of widely accepted centrally controlled regulation on a national basis would be the nuclear power generation and nuclear fuel supply industries. Where every ...
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Why does interest rate differential affect capital flow in equities?
With the recent news of US fed hikes, there are emerging markets where central banks have decided not to raise rates, like in India, Indonesia, China, etc. The common theme I read everywhere is this - ...
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Homothetic preferences for international trade
In international trade class, we assume homothetic preferences for every country, and each country has an endowment. Why do we assume homothetic preferences? Is this because we see (from data) that ...
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Asking for the explanation of the result of DDD?
I am following Stata package to run the did_imputation of Borusyak,2021 in using the DiD imputation estimator
The normal DiD estimator in their regression is
did_imputation Y i t Ei [if] [in] [...
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How to visualize when the signs of two subsamples are opposite and example? (Simpson Paradox)
In some studies, when we do subsample and if it is nice, we may see the signs of coefficients of variables of interests are consistent among the whole sample and subsamples.
However, it is not always ...
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How does a trade deficit affect GDP?
How would an increase in the trade deficit affect GDP?
As per the majority of sources I’ve read such as Investopedia, they claim that GDP would decrease due to a decrease in the NX component of the ...
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What is the term for the means of conducting international financial transactions?
I'm looking for a term (say "X") that describes a general category of process. Over time, the details of the process or even the process it self changes, but they would all still fall under ...
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On what basis do countries repay international loans?
Most countries have their own sovereign currency. Essentially they can print their currency. So how do countries repay their loans? And a similar question would arise while granting a loan to another ...
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Proof of Factor Price Equalization
Assumptions:
2 nations - 1 and 2
2 goods X and Y where X is labour intensive and Y is capital intensive
Perfect competition across commodities market
same technology in both nations
both face ...
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When we should use SIC2 and SIC3 in fixed effect?
SIC is the industry classification. The definition of SIC from Bigelli, 2006 is
Due to the low numbers of firms in some industries, we use the most
detailed industry (SIC4) only if the number of ...
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How leniency laws are ineffective in destabilizing cartels in Dong(2019)
In a paper, Dong, 2019 mentioned that leniency laws can destabilize the cartel or induce the formation of new cartels. Their argument is as below
- Leniency destabilize the cartels
On the one hand, ...
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