Questions tagged [international-trade]

International trade theory is a sub-field of economics which analyzes the patterns of international trade, its origins, and its welfare implications.

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Does a high current account deficit devalue the national currency?

I've been reading some materials about Belarus's 2011 financial crisis, and a common thread among them is this: Belarus had had a rapidly growing current account deficit, and in 2011 it came to a head ...
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Is it an international norm to have excise or tariff to be balanced or reversed when exporting goods?

It's an accepted international norm to charge VAT on import and rebate VAT on export, such that goods from different countries can be competed on a level playing field. However, is it the same with ...
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Why has China's integration into the global economy caused it to slow it's output?

In the following passage, what does it mean to be integrated into the economy and why does this mean that now China and India are integrated into the economy that their output has slowed down? In the ...
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Equities-dollar correlation

Equities-dollar correlation was mostly positive in the 2000s and switched to negative since the GFC. Are there any structural drivers explaining this change in correlation?
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Can I add a variable that varies only with time in Least Squares Regression model with a time-fixed effects term?

I'm estimating this equation for the trade flows between various countries at time t: ($i$ and $j$ are countries) The last 3 terms are control variables, one of which is oil prices. Can I add oil ...
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Why would foreign asset purchases by PBOC temper yuan appreciation?

Suppose the PBOC buys a bunch of dollar-denominated bonds, using its dollar reserves. All else equal, what effect should this have on the yuan-USD exchange rate? And why? It amounts to trading non-...
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Are financial markets “unique” for each “currency pair”, or are they simply “translated”?

This is something I've been long wondering about. Let's say that I have statistics showing the daily closing Bitcoin price in USD since early 2009. Great. Now, if I wanted to get the daily closing ...
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Creating a pragmatic, useable (not theory heavy) proxy for a currency basket for a set of economies

This is currently, a gedanken experiment, but may well form the basis of a whitepaper - or better still, an actual project. I am trying to come up with a practical way of creating a "currency ...
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Where in the BOP does the rental of a building appear?

Say a Japanese citizen (living and working in Japan) owns a house in the US and rents it out (to a US resident) for \$10,000 in 2020. (Assume the value of the land is negligible.) Where in the US BOP ...
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Why would a digital Yuan (or some other national currency turned into a CBDC) “help fast-track international settlements” in that currency?

I'm trying to understand the basis of this claim As the main mode of transaction in the world's second biggest economy, China's currency should be a natural contender for the spot. However, the U.S. ...
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Does trade between countries tend towards a state of only containing monopolies as a result of comparative advantage?

I've recently been reading Mankiw's Microeconomics 8th edition. In there he raises the idea of comparative advantage and points out how if we have two participants in an economy who both produce ...
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Question about migration wages

I have a question with the following statements. Adding the gains to the Home economy from the Foreign workers, we end up with the triangle ABC, which represents the Home gains as a result of full ...
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Does the WTO monitor the trade of players in association football? Could they?

So I understand the WTO is able to settle trade disputes. If the German Bundesliga said English players had a 1% luxury fee that went towards operation costs (A \$100,000 transfer would cost \$101,000,...
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Why are anti-dumping duties considered to be non-tariff barriers to trade?

English is not my first language so sorry in advance! please help me on this one I can't find a good answer, and until I have understood this one, I won't get the whole non-tariff barriers to trade ...
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GDP of domestic and foreign economic activities of a country

Is there an indicator which shows how much GDP of a country is generated by domestic economic activities (e.g. business between food production in Germany and agriculture in Germany) and how much GDP ...
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Does comparative advantage maximize revenue?

I am reading Lovell's "Economics with calculus", where in Chapter 2, he presents Ricardo's Theory of Comparative Advantage, and states how in a simple model two countries benefit from free ...
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Can individual consumers ever be price-makers, and can they thereby have major effects on welfare?

Suppose there's a big demand shock on some good X. As long as X has fairly standard supply and demand curves, that'll raise the price. And all of the buyers who would have bought at the lower price ...
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unit iso-quant curve and unit iso-value line

This question is about international trade theory. For the labor L and capital K, I know the theory of iso-quant and iso-cost. The price will be determined where iso-cost line touches iso-quant curve. ...
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Log deviation from steady state - understanding a journal paper

I hope a question like this is fair game on this website! I'm doing some research for my thesis, and have come across what seems to be a pretty simple model - two countries, A (representing the USA) ...
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Most outsourced industries of USA?

Which industries reduced the most in the USA as a result of outsourcing and imports? Maybe textiles is one of them. I heard about a rust belt. Which ones are the others?
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connection between foreign assets and trade surplus / deficits

I am reading Piketty's "Capital in the 21st Century" and in Chapter 5 he writes "Furthermore, the evolution of a country's net foreign asset position is determined not only by the ...
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What are some examples of goods that entrepreneurship-intense?

Entrepreneurship is considered to be one of factors of production (the other factors of production are capital, labor and land). According to Heckscher–Ohlin model, a country that has an abundant ...
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What is technology in the Ricardo model?

I've been reading about the Ricardo and Heckscher-Ohlin models. I'm having trouble following what makes a worker in the former able to produce more or less of a given good. So e.g. suppose a US worker ...
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How does the imposition of import duties affect the nominal and real exchange rates in the long term?

Let's assume that a country imposes an import duty on goods imported from abroad. How will this change the long-term real exchange rate between domestic and foreign currencies? How will it affect the ...
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What'll happen to production and consumer distortion loss in a large country with tariffs?

Suppose here $P_0$ is the initial world price, and after tariffs is imposed the world price drops to $P_1$. What would be the production distortion loss and consumer distortion loss? Would it still be ...
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Which countries have the comparative advantage in Ricardo's example?

I am a complete beginner here trying to learn through Khan Academy. I found some data that correspond to Ricardo's explanation of comparative advantage. According to Wikipedia "England has a ...
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Optimisation and Theory of Comparative Advantage

In my school's lecture notes on International Trade, a numerical example of how the Theory of Comparative Advantage is featured. It is a simplified 2-country, 2-goods model and features constant ...
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What are “targeted supplies”?

From New geopolitics of natural gas: the policy of assisting friends can include price discounts, [targeted supplies] , or financial or technological support to develop energy resources for partner ...
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Why does a tariff have no effect to an exporter?

I'm reading Principles of Economics, the paragraph about tariffs in a imaginary country Isoland wrote: "The Isolandian economists next consider the effects of a tariff—a tax on imported goods. The ...
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Why would a low wage country affect negatively the high wages of a country with trading?

I was reading a book that asked this question. "Does trade with low-wage countries depress wage rates in high-wage countries?"Why did they mention specifically low-high wages countries?
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Why didn't other oil pricing benchmarks such as Brent go negative?

This question is asking why the oil (in this case, WTI) price is negative. While I think I have broadly understood why WTI collapsed, I don't really understand why other oil pricing benchmarks didn'...
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Financial Economics and International Economics

What is the difference of Financial Economics and International Economics? Why, How? What are the implications of these differences? Will a model of international economics suddenly become a model of ...
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How does the trade problem in Ricardian model of int'l trade work?

Sorry if this question seems fragmented; I have minimal background in economics, I just grabbed some notes and began studying. The scenario is given as: "Suppose Germany needs to make a 1 billion ...
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What is the impact of inflation on Pakistan's exports?

I want to know about the relationship between inflation and exports. What is the effect on exports when inflation increases or decreases?
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Why do we spread knowledge across nations?

We have access to lots of knowledge on paper sharing platforms, open course platforms, open-source platforms and question asking platforms and etc, and Tesla opened all its electric car patents in ...
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Export is high sensitive to external income. How can be this explained?

I am estimating an export equation, where dependent variable is export and independent variables are exchange rates, external income and other controls. Each coefficient is an elasticity. The results ...
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How can I control for trade between UK and Australia in my difference-in-difference trade model?

I am doing a report on whether environmental regulation has an impact on trade, using a difference-in-difference model and seeing whether the EU Industrial Emissions Directive had an effect on UK ...
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Does the UK have a trade agreement with Australia?

Since the UK was a member of the EU, I'm assuming the EU was responsible for any kind of trade arrangements between the UK and Australia, but I'm not entirely sure. Does the UK have an agreement with ...
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If a Chinese person wants to buy an iPhone or any international goods, which GDP per capita would be a better indicator?

Which GDP per capita of a Chinese citizen would better reflect their affordability- Nominal GDP per capita or PPP GDP per capita of China? My question is would PPP would matter much in case of buying ...
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Finding data on (estimated) trade cost elasticities of imports

I'm an undergrad student of economics, and I need to find estimates of the trade cost elasticity of the UK's imports for some homework. My instructors pointed me to the World Bank's databases, ...
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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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Why do we say that trade and specialization according to comparative advantage lead to one-time increase in PPF of given country?

PPF shows us different combinations of goods that we would be able to produce if we employed existing resources of our country in the most efficient way. One thing to notice about PPF: It's ...
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How a country buy stuff from other countries? and what is its means of exchange?

I was thinking about this scenario, where a country X wants to buy some toys (worth of 100$) from country Y. both of them have their own currency-- not USD. So, now,...
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Would GDP for a pure endowment economy be equal to zero?

(Am I correct?) As far as I understand, a pure endowment economy means that good just appears in the country without any labor involved in producing them. Like maybe given country lives entirely from ...
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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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Balance of Payments and Capital Inflows

We know from the balance of payments identity that: $$ BOP=CA+KA+FA=0 $$ where $CA$ is current account, $FA$ is financial account, and $KA$ is capital account. The BOP is an identity that always ...
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Who exactly suffered more in the US-China trade war?

The US and China signed a trade deal recently that made the news. Shortly afterwards, Nobel-prize winning economist Paul Krugman claimed that the US lost the trade war. His argument is that US ...
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(Ricardian model)Is it correct that complete specialization in comparative advantage CAN lead to DECREASE in total production?

I have the model in my electronic spreadsheet (created by me) and its results quite suprised me. In short, complete specialization (I just call it specialization) in good where a country has ...
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Interpretation of dummy variable : Random Effects Model

I am running a RE regression and I have export similarity index between two countries as the dependent variable and have a dummy variable such as share a border(=1 if countries share border, 0 ...
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(Modified comparative advantage model)Can trade with a country that only has one industry be mutually beneficial?

Suppose there are two countries, China and Japan. Suppose there are also only two goods, namely food and bronze mirrors. China produces both food and bronze mirrors, while Japan produces only food. In ...

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