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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38 views

Any serious macro models for Greece's possible default or eurozone exit?

Since each news outlet says something about Greece these days, I wonder what serious economic research backs decisions made over the last seven years? The IMF papers on austerity, both early ones and ...
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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?
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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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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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32 views

Dornbush model - relationship between i and S

In the Dornbush model, when we separate short and long run equilibrium. This is what I apparently have understood: SR1: an increase in Money Supply ($M_s$) leads to a fall in domestic interest rates (...
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35 views

Argentina taxes

I don't understand this report http://uk.businessinsider.com/wef-27-countries-with-the-highest-tax-rates-in-the-world-2016-2 How can it be that Argentina turnover tax is 90% of income (everywhere ...
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44 views

Why is the current WDI missing CPI data for some countries (including the UK and China)?

I'm downloading data on inflation in different countries, and using the World Bank's World Development Indicators (WDI). Specifically, the Consumer Price Index series (CPI). (http://data.worldbank.org/...
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29 views

The new AIIB, Japan and America

The AIIB is the Asian Infrastructure Investment Bank. It's an international financial institution proposed by China. Almost all Asian countries have joined and a lot of European countries. Here is the ...
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1answer
33 views

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
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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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 ...
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99 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 ...
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107 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 ...
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28 views

Devaluation of exchange rate meaning

Pilbeam's textbook on International Finance (p. 106) says: (...) the immediate effect of a devaluation of exchange rate from $S_1$ to $S_2$ is to make domestic good competitive (...) How can be ...
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21 views

When finding targets in a trade war, does the goods balance or trade balance matter more?

By most measures, most people who look at trade balance, but it might include a good chunk of services imports/exports who might not be as readily subjected to tariffs.
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82 views

Consequences of a positive uncovered interest rate parity (UIP) spread for an emerging market economy

Empirically we observe that the uncovered interest rate parity (UIP) does not hold; in fact the exchange rate adjusted return on an emerging market bond is higher than the return on US bonds; I know ...
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160 views

Under what conditions are tariffs or export subsidies expansionary?

Charles Kindleberger writes in the introduction to /The World in Depression/: The imposition of tariffs should be expansionary for the importing country, if contractive for the countries losing ...
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143 views

Ricardian Model: Trade pattern rules (ch. 3 Krugman's book)

I'm reading chapter three of International Economics by Paul Krugman et al. I have two questions that are somewhat related. Question 1: Let $P_{c}$ = price of cheese, $P_{w}$ = price of wine, $a_{Lc}...
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47 views

What's the equation of currency fluctuation?

Preamble: Today the rate of EUR is 82.09 in BDT ( Bangladeshi Currency) and two hours later it's 82.50 ( I hope, it's increasing). But why does this fluctuation just keeps happening? Looks like the ...
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28 views

Relationship between changes in Currency against basket of currencies and inflation

Sorry I'm not an economist, but I was wondering if there was a general country by country guide to how inflation there changes with response to a change in the currency's value against a basket of ...
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171 views

External economies of scale: who will produce when going from autarky to free trade?

Hi "Assume that two countries can potentially trade goods in an industry that is characterized by external economies of scale. Country B produces at Q(B) in autarky and country A produces at Q(A) in ...
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109 views

Why shouldn't the relative prices change in the Heckscher-Ohlin model?

I'm having trouble with the Rybczynski theorem. Let's say there's a migration to the domestic economy, increasing the Labor endowment. It states that the production of the good that uses labor more ...
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40 views

Deriving Marginal Product For Hecksher-Ohlin

I'm using the second edition of applied international trade by Bowen and for the HO model, the marginal product with respect to capital ought to be the first term of the final answer (as given in the ...
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173 views

How does a country increases or decreases it currency value (exchange rate) against other nations currency?

I want to know how a country, Mexico for instance, keeps the exchange rate higher or lower against other nations currency, USD, EUR, JPY. How does the value of a nation currency is valued against ...
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1answer
77 views

Did the dollar depreciate when Trump won the election?

I expected the the dollar to briefly depreciate against all currencies when Trump won the election (in 2016), but I have just learned that it briefly appreciated against some. It depreciated against ...
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49 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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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 ...
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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 ...
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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
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15 views

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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13 views

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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22 views

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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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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13 views

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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8 views

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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5 views

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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12 views

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?
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18 views

What is the rationale behind David Friedman’s division of countries?

David Friedman stated, on multiple occasions, he’s wary seeing Europe become one single country. Similarly, he’d much rather have the US divided into more independent societies. What is ther ...
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1answer
146 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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499 views

Why does only relative price and not absolute price matter in international trade models?

Suppose I have two teachers: Adam and Bob. Suppose Adam takes 20 hours to lecture and 30 hours to grade, while Bob takes 100 hours to lecture and 60 hours to grade. In absolute terms, Adam is ...
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45 views

How does the cost of switching over to green energy compare to the cost of the war in Iraq?

How does the cost of switching over to wholly green technology in the US at current prices and at current technology without factoring in possible improvements in efficiency or technology solely in ...
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50 views

Why do large financial institutions make international transactions in digital currency?

I've heard that blockchain technology has been used extensively by financial institutions when making international transactions to eachother, with speed and transparency and cryptographic security ...