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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15
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1answer
2k views

How could the economic cost of the world not speaking the same language be estimated?

While languages are fun and add color and flair to cultures and make the world a more interesting place, they also have a cost. Beyond the monetary costs of translation/editing/proofreading, ...
14
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3answers
674 views

Destroying the dollar

Let's destroy the USD dollar: I am the government of a small, economically and geopolitically unimportant country that has its own currency and a local central bank. I order the local central bank (at ...
12
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3answers
958 views

Why does China buy so much US treasury debt?

What is the reason that China buys so much US debt in form of Treasuries? How does this help the Chinese economy? It seems they are willing to give money to USA so USA economy can function better (...
11
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2answers
636 views

Effect of a permanent increase in government expenditure in an open economy?

In Krugman & Obstfeld's International Economics, 8e, Chapter 16, an involved argument is given showing that a permanent fiscal expansion will not affect output even in the short run. It seems to ...
10
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2answers
326 views

Are there any states that don't have debt?

I've not been able to find any states that don't have debt to other states. This, to me at least, seems really strange. Are there any nation states that are not in debt to other states, if so which ...
7
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2answers
867 views

Can a closed economy flourish?

I was wondering if it is possible to run a country based only on domestic economy and not to enter the world economy. Basically, if certain economy of a certain country fails and poses threat to world ...
7
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2answers
835 views

Why would China and Russia selling the US' debt ruin the economy?

I was listening to an interview with David Harvey and he mentioned that if Russia and China were to sell the debt owed to them by the US, the US economy would take a serious dive. How would they sell ...
7
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2answers
477 views

Ricardo's theory of comparative advantage

The aim of this question is to better explore the mathematical economics model behind Ricardo's theory of comparative advantage and the claims that can be made based on this model. This seems ...
6
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2answers
6k views

Fixed vs pegged exchange rate: What's the difference (if any)?

I am told very firmly by an economist that a pegged exchange rate is NOT the same thing as a fixed exchange rate. So what, if any, is the difference between the two? Addendum: Here's one webpage ...
6
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1answer
398 views

Omitted variables in gravity model

I'm trying to construct a gravity model for EU trade flows using a panel dataset, but am suffering from what appears to be a persistent omitted variable problem. My residuals display a queer log-like, ...
6
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2answers
2k views

Why could China, much poorer than US, lend so much money to US?

The GDP per capita of China is only a fifth of that of US. But China has lent more than a trillion dollars to US. How could the much poorer China lend so much money? Where did those money come from?
6
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2answers
119 views

How will London's role as a financial center be affected after the Brexit and what are possible alternatives?

I looked around on this site and couldn't find anything close to what I'm asking on Economics SE, so I hope it is the right place to ask. I am interested in but have no background in economy, so all ...
6
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1answer
768 views

Purchasing Power Parity (PPP) and Law of One Price (LOP)

If PPP were to be satisfied in reality, does that mean the Law Of Price is satisfied for all goods in a basket of goods used to generate the price levels of the country? Or, since PPP uses only ...
6
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2answers
300 views

If Greece defaults, can it still stay with the euro?

Should Greece default, a forced conversion from euros to drachmas will be a further catastrophe to Greek economy as the drachma will quickly collapse. However, if Greece leaves the Eurozone, but keeps ...
5
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1answer
114 views

“Buy a country”, expression or possibility?

I keep hearing the term, "enough money to buy a country". My question is: Is it realy possible to buy a country or is this just an expression? and if so how would this work since there is no 1 person ...
5
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2answers
165 views

How does the russian interest rate raise will defends the Ruble from devaluation?

This strategy (interest raise to minimize currency devaluation) is being adopted in countries like Brazil and Russia: Brazil interest rate http://www.tradingeconomics.com/brazil/interest-rate Russia ...
5
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1answer
123 views

Do we have some evidence of overshooting?

I was going through overshooting of exchange rates (which I probably haven't seen since undergrad) and it seemed to me that the story is a bit of a stretch. I wonder if there is some empirical test ...
5
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2answers
169 views

Why does every electronic transaction of USD legally take place on American territory?

In an article of a respected German newspaper (Die Zeit) I found the following statement (translation by me): 90 % of all foreign exchange trades are dealt in USD. Since every electronic ...
4
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2answers
229 views

Why Nobel prize winners studied economics?

Recently I have read a great article about Olivier Blanchard and I wonder why he has chosen to dedicate his life to study economics? Moreover he managed to do a research in several subfields, which ...
4
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3answers
159 views

Is the development of “developing countries” evidence against the idea that former colonial powers owe their headway to exploitation?

There is a recurring narrative (especially but not exclusively in left-leaning circles) that today's "developed nations", particularly Western former colonial powers, owe much of their wealth and ...
4
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1answer
144 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 ...
4
votes
1answer
53 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 ...
4
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2answers
780 views

Uncovered Interest Parity question

I am trying to understand the fact that, given that the uncovered interest parity holds, a rise in dollar interest rates will cause the dollar to appreciate. Is this a good intuition? Uncovered ...
4
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1answer
634 views

What are the factors that drive openness in developed vs developing countries

My questions are: What are the factors (both positive and negative) that drive openness in a country? Do they differ between developed (e.g USA) and developing (e.g China) countries? Will these ...
4
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1answer
116 views

Introductory or Primer text on Economics?

I've been meaning to learn more about economics, and am looking for an introductory text or a primer on the topic. I've already taken a subject on this back in high school, but I guess what I'm ...
4
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2answers
115 views

How is sending money out of a country draining its economy?

From this article: Every year, Mexicans working in the U.S. send at least $20 billion back to Mexico in the form of remittances, placing a huge drain on our economy. But I don't see what negative ...
3
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1answer
322 views

Screw foreign investment, lets just print money

We often hear of countries securing foreign investment. Stores like this are trumped as major achievements. Foreign investment also has criticisms - profits generated in a country end up going abroad, ...
3
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1answer
316 views

How can the HKMA peg the Hong Kong dollar at 7.8 HKD/USD for so long?

A lot of pegged exchange rate systems don't stay pegged for so long (e.g. because the central bank run out of reserves to maintain their values) So far I understand that the HKD is 100% backed by the ...
3
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2answers
2k views

What would happen if the US defaults on its debt?

As has been widely discussed already, the situation in Greece is considered more serious than in the US, as they have dollar-denominated debt and can only print Greek currency. The US, has the benefit ...
3
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2answers
157 views

Is Russia in a deep economic crisis?

Premise: I see that the site is for professional and academic economicists, and I'm neither. However, since I've been participating to other SE sites for some time now, I consider SE a trusted source,...
3
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2answers
635 views

Why are some goods without close substitutes not sold in some countries?

Especially in consumer electronics, a large number of goods are offered only in some countries. Usually this holds only for products which have some close substitutes available (e.g., screens, where a ...
3
votes
1answer
61 views

Do German Goverment bonds usually include (or included) a condition that the debt will not be serviced in case of trade imbalance?

Today the Spiegel ran an article on a proposal to end the Euro Debt Crisis. That article made the claim given in the title Syriza will eine sogenannte Wachstumsklausel für jene Schulden einführen, ...
3
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2answers
49 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 ...
3
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3answers
156 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 ...
3
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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 ...
3
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0answers
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 ...
2
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3answers
101 views

Why are aeroplanes not made in one place?

As an example, different parts of an Airbus A380 are produced in factories all over Europe, and then assembled in a factory in France. Transporting these massive objects must be incredibly expensive (...
2
votes
1answer
127 views

Why do all countries recognize foreign wealth?

Recently I learned that by 2016 that 1% of the population will have 50% of the worlds wealth. That means that more than 50% of individuals actually has less than he would in a totally fair economy. ...
2
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3answers
324 views

Why does the IMF push for austerity?

Are there any countries that applied austerity measures and had a positive outcome that was attributed to it? Why do institutions like the IMF often encourage or require it?
2
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2answers
11k views

Why does the Balance of Payments have to (more or less) equal zero

It seems to me that the non-reversible transactions included in the current account, and the reversible transactions included in the capital and financial account, are unrelated, and should therefore ...
2
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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 ...
2
votes
1answer
79 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
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1answer
29 views

In which cases prior to the Greek crisis did the IMF admit mistakes in it's economic policies?

Has the IMF ever admitted mistakes on it's economic policies prior to the Greek crisis?
2
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1answer
45 views

The effects of Quantative Easing (QE) on FX rates?

What are the effects of quantitative easing on the foreign exchange rates? If the central bank starts buying debt denominated in domestic currency, I would think that the market would be flooded ...
2
votes
1answer
109 views

How will the economic effects of Brexit impact a middle-class American family?

On the news it was stated that the UK leaving the EU has already caused trillions of dollars of loss to the world economy. While the newscaster made it sound very serious, I don't have any ...
2
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1answer
45 views

Is there anything like ratio between number of manufacturing industries to number of retail shops?

In my country there are very few manufacturing factories,but large numbers of small retail shops (like one shop per house or may be even more). What are the effects in the economy of a country for ...
2
votes
1answer
206 views

In the Ricardian model, why are two out of 3 cases invalid?

I am considering the Ricardian model. There is an economy with two countries $S,T$. Two goods $a,b$. Each country has linear production technology with labor ($\ell$) as only factor of production. $...
2
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1answer
73 views

Should I use current prices or volumes estimates?

I am writing an empirical paper with National Account's data from the OECD. The analysis of the data consists basically in calculating the cross-correlations among countries of GDP, investment, ...
2
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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?
2
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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 ...