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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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 ...
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1answer
48 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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1answer
41 views

What can explain increasing exports after default episodes?

I am going through a paper on sovereign default by Mendoza and Yue (2012), in which defaults are explained in terms of how firms that use foreign intermediate inputs lose access to international ...
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1answer
34 views

Emerging Market dollar debt, FX swaps and exchange rate risks

"An FX swap, on the other hand, creates no exchange rate risk for its counterparties. This is because currencies are sold and repurchase at fixed spot and forward rates. In other words, when you sell ...
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3answers
83 views

When can we expect China to become a developed country?

China has the 2nd largest GDP in the world and also has a high GDP growth rate. According to Richard Lynn's IQ and Global Inequality, the Chinese have a mean IQ of 105, which is one of the highest in ...
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1answer
36 views

Where can I find data on market capitalization?

I am working on Home Equity/Bond Bias and need data to calculate the indicators of Home Equity Bias. So where can I find data on market capitalization (stocks and bonds) by year for each country? ...
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1answer
52 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 ...
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0answers
34 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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0answers
29 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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0answers
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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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1answer
34 views

Terms definition in Balance of Payment

I have problems in distinguishing among terms in the Balance of Payment / the international balance sheet of a nation. As far as I know, on Assets and Liabilities sides of BPM, there are Portfolio ...
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1answer
36 views

Why shouldn't governments use Forex reserve to pay their debts?

India has around 470 billion USD in debt and has around 400 billion USD in forex reserves. So why should India or any other nations shouldn't use their forex reserves to pay off their external debt ?
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1answer
405 views

Generic bond yileds

I was looking on historical sovereign bond yields for a project. I was wondering what is meant by "generic bond yields" mentioned on bloomberg. Somewhere else i found data about the same country but ...
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2answers
868 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 ...
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3answers
107 views

Why does a strong dollar make imported goods cheaper?

I'm having a hard time visualizing why a strong dollar would make an imported good cheaper? If I buy an ounce of gold in the US for \$1,353.70 (todays rate) and I buy an ounce of gold in Europe, ...
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1answer
215 views

Impulse response functions?

I have a very basic model about a small open economy. This is a summary: $$ E_0\sum_{t=0}^{\infty}\theta_t U(c_t, h_t) $$ utility function: $$ d_t = (1 + r_{t-1})d_{t-1} - y_t + c_t + i_t + \...
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0answers
83 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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3answers
105 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 (...
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1answer
173 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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2answers
295 views

How does Russia have so much foreign exchange reserves?

Source Russia is under U.S. sanctions. How does Russia have so much foreign exchange reserves?
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1answer
588 views

What's the economic effect of a country reducing its imports?

If a country enacts a program that successfully reduces its imports, eg: A 'buy local' advertising campaign A program of training mechanics to maintain older cars, rather than buying new imports An ...
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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, ...
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0answers
32 views

Why Yen grew stronger after North Korea's H-bomb threat? [duplicate]

Financial markets have had only a muted reaction to the dispute in recent months, but on Friday assets regarded as havens for investors jumped immediately after the news of North Korea’s latest H-...
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0answers
167 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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2answers
140 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 ...
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2answers
185 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 ...
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1answer
344 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 ...
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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 ...
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3answers
71 views

What is used more: economic growth rate compared to previous quarter (GPSA), or growth rate compared to the same quarter of the previous year (GYSA)

For my thesis I'm writing about the Baltic states and why they didn't vote out their incumbent governments despite undergoing severe austerity. As part of that I'm looking at their growth rates from ...
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2answers
130 views

Why war can remit the economic crisis?

In the history, like Japan, in the World War II, they had a hand in the war, the root cause is the economic depression. And in this century, some country use this method many times to remit the ...
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1answer
457 views

Net Positions vs Gross Positions as they Relate to the Current Account

What is the difference between say, gross asset and liability positions and net asset and liability positions? I mean these terms in the particular way that Cavallo and Tille use them in their 2006 ...
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1answer
36 views

Link between supply of domestic assets and monetary policy

From Treasury's Oct'2016 FX policies report: Switzerland’s economic policy situation is distinctive given its relatively small stock of domestic assets, which limits monetary policy options to ...
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1answer
2k views

What does 'one dollar, one vote' mean?

Can you tell/ describe me what the phrase 'one dollar, one vote' means? But you have to use basic English or kid's English. :-) I found the phrase in one economics book (Introduction to Economics by ...
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1answer
189 views

Are Terms of Trade reciprocal?

I am trying to learn the meaning of Terms of Trade, but I'm confused. From the wikipedia article, it says that TOT is the ratio of the value of exports over imports, and since for the other country ...
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0answers
145 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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50 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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2answers
234 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 ...
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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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1answer
50 views

Restrictions on goods and capital, but freedom of labour movement

I recently had a discussion with a left-wing friend in the UK about about Brexit, and the possible repercussions of restriction of labour when the UK leaves Europe. He argued that as someone who is ...
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1answer
78 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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1answer
112 views

What is a bilateral currency swap line? [closed]

Please explain in simple terms. How exactly does it function?
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1answer
62 views

How do Trade Costs work in International Trade?

I'm currently reading a paper about trade costs in international trade, but I really struggle to understand the following passage: A rough estimate of the tax equivalent of “representative” trade ...
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0answers
175 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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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?
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2answers
163 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,...
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2answers
871 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 ...
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1answer
335 views

International Trade: Two country trade problem

A country (home) is pouplated with workers who produce either Food or Clothing. There are 200 workers producing food and 100 producing clothing. Each food worker produces 6 units of food and each ...
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1answer
57 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 ...
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1answer
642 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 ...
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2answers
121 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 ...