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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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13 views

PPP and real exchange rate [closed]

Can someone help me with this question. It shoul be easy but i am not able to solve any of them. Thanks
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28 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
34 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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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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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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35 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
65 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 ...
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145 views

Why can we see the Current account as variation in NIIP?

Let's designate the Net International Investment Position(NIIP:it's the net international wealth of a country), as $B_t$. Why can we see the current account at time t, as $CA_t=B_{t+1}-B_t$ , when we ...
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48 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 ...
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1answer
35 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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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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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
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Alternatives to avoid sanctions

Recently we saw that EU and Iran devised an instrument called INSTEX to avoid dealing in dollars and hence avoid US sanctions. Similar thing is being planned between India and Russia (regarding S-400 ...
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1answer
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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
58 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
50 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 ...
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1answer
133 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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1answer
71 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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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 ...
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1answer
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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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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 ...
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1answer
25 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
27 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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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
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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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3answers
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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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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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Characterizing nations in global commodity market

I'm not an economist, so I'm looking for help making sure I'm not reinventing the wheel, or if I am, that it's at least round. I've been set the task of modeling a multi-step supply chain using UN ...
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1answer
47 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 ...
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1answer
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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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Related Literature about Exports

I am working on my master thesis, where I investigate the impact of the Russian embargo on Georgia's exports. I have already identified my dependent variable, as well as the variables of interest. ...
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What are the hot topics (sub-fields) in the International-trade to pursue for the research work?

I am interested in trade economics. Suggest me some hot topics and authors in the field. Different dimensions of trade economics. Use of game theory, networks etc.
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2answers
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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 ...
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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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27 views

Uncovered Interest Rate Parity Assumptions (UIRP)

When learning about UIRP i have naturally come across the assumptions under which it may hold. However i am having trouble understanding the role of these assumptions and what the actual consequences ...
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Exchange rate target zone 45 degree line in the free float case - Krugman Target Zones

As far as i understand in the Krugman target zone model the following equation describes the behaviour of the exchange rate within and outside a target zone $s_t = f_t + \alpha E_t(ds_t/dt)$. But if ...
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why US don't like China trade deficit? [duplicate]

Because of the dollar, US basically have unlimited credit. US could simple print money for good. Why US don't like China trade deficit? If US is a person, and the person could use paper to exchange ...
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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 ...
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wage/productivity, what does it show

I just confused about the fact that does wage/productivity show the wage gap? So if wage/productivity is the wage gap then by the increase in productivity the wage gap should decrease as the ...
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1answer
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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 ...
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2answers
33 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)...
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Framework for assessing suitability of government intervention

I am writing a paper on mobile roaming and I am having trouble with some aspects of it. The paper is required to have an "analytical" part and I am struggling to come up with suitable ideas. I figure ...
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1answer
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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 ...
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3answers
152 views

Are markets inherently short sighted?

If markets are types of "information systems", how do they assist in the attainment of a future common objective that is beneficial or even necessary to a society? Since markets are driven by ...
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2answers
62 views

China causing Currency War

Recently there have been reports of China devaluating its currency against the U.S Dollar. I'm a layman and I am unable to understand the need for a country devaluating it's own currency. How would ...
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1answer
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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 ...
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2answers
100 views

Do sanctions work?

When countries commit "economic crimes"---ie, theft of intellectual property, dumping, currency manipulation---are sanctions effective at making them stop? I am specifically looking for examples of ...
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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 ...
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Cross Currency Swaps

How can cross currency swaps or derivatives be used to help a country hide its debt? How did Goldman Sachs do this in Greece’s case?