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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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Why can the Lagrangian Multiplier be dropped in the inverse demand function?

I'm deriving the Antras and Helpman (2004) paper. The model assumes a nested CES utility function $$ U = x_0 + \frac{1}{\mu} \sum_{j=1}^{J} X_j^\mu $$ where $X_j = \left[ \int x_j(i)^\alpha \,di \...
Hopeless Economist's user avatar
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1 answer
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Why does an increase in the Dixit-Stiglitz price index lead to an increase in demand?

I'm studying the graduate international trade lecture notes by Treb Allen and Costas Arkolakis posted on their personal homepage. The first chapter covers the Armington model. After deriving the ...
lidoor kulow's user avatar
2 votes
1 answer
40 views

CES Price Index in Melitz (2003)

I am reading Melitz (2003), and I cannot understand why the CES price index can be rewritten as an integral including $M$ and $\mu(\phi)$. I find the lecture notes by Dave Donaldson (https://dave-...
LEcon's user avatar
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Derivation total demand using Roy's identity

I have a "resource-balance" equation of the form (imports in sector $i$) = (number of $i$ demanded domestically) - (number of good $i$ supplied domestically). I can't figure out how the ...
1989-a-number's user avatar
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Why did Malaysia's high-tech export share decline in Y2022?

Recent World Bank data on Malaysia's high-tech exports share show a sharp decline. What are the reasons for such a drastic structural change? Or is it just an error in the data? (I can find no ...
garej's user avatar
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Are agricultural products and crops measured and compared by monetary value, mass, volume or calorie content?

This may seem a weird or stupid question (my first one Economics SE), but.... Most of the time in the media I see, hear or read about percentages, such as, "X-percent of food consumed worldwide ...
Kurt Hikes's user avatar
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1 answer
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Import proportionality assumption in input-output tables

I'm struggling to get the meaning of the assumption underlying the construction of the input-output tables, that is, the proportionality assumption. I read: When materials offshoring is measured by ...
Maximilian's user avatar
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1 answer
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Economies of Scale, texbook example

I am currently studying international economics and I'm going over economies of scale, I get the concept, but there is an example in my textbook that I don't understand. Here is a screenshot for ...
KEll's user avatar
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Where can I find the cost of commodities in different markets?

Where can I find a database that tracks current and historic prices of different products and services in regions around the world? I'm very sure that some organizations track the cost of common ...
Michael Altfield's user avatar
1 vote
0 answers
26 views

Current Account deficit but FX appreciating?

When the Current Account (CA) is in deficit it means there is less demand for a currency than supply so it should theoretically depreciate but sometimes this does not hold. When a country with CA ...
Finance_student's user avatar
2 votes
0 answers
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How does CPI respond to change in shipping costs?

Is there any quality research that already attempted to quantify the effect of shipping costs on CPI or inflation? Preferably I am looking for an estimate relevant to EU (however, I understand there ...
Lorenzo Pozzi's user avatar
1 vote
2 answers
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Surplus in the Financial Account - BoP

As a student I am trying to understand the BoP dynamics resulting from a net inflow in the financial account (FA) of a country. Assuming a country has a Current Account (CA) deficit of -50. CASE1: if ...
Finance_student's user avatar
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1 answer
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Internationalization of Chinese Yuan, and Chinese exports?

If Chinese Yuan is internationalised and more countries use it to settle payments, then wouldn't that cause strengthening of Chinese Yuan and make Chinese exports uncompetetive ?
ecorajx's user avatar
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1 answer
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Deriving Unit cost function

Unit cost function is the minimum cost to produce one unit of output. The solution to the above problem is: where ai(w,r) is the amount of labour needed to produce 1 unit of good i at factor prices (...
user205152's user avatar
10 votes
4 answers
4k views

Would poorer countries be better off by cutting off all trade with rich countries?

A 2017 Guardian article covered research that outflows from developing countries, primarily by way of unrecorded capital flight, significantly outstrips inflows. ... for every $1 of aid that ...
KDP's user avatar
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Increasing Returns to Scale and Perfect Competition

Increasing returns to scale due to internal economies are incompatible with perfect competition BUT increasing returns to scale due to external economies are compatible with perfect competition SOURCE:...
user205152's user avatar
1 vote
1 answer
71 views

direction of causality between Increasing returns to scale and economies of scale

Does increasing returns to scale cause economies of scale OR is it the other way around?
user205152's user avatar
1 vote
1 answer
174 views

the relationship between Returns to Scale and shape of Production Possibility Frontier (PPF)?

Guys any material that discusses the above in detail for a two commodity case?
user205152's user avatar
2 votes
1 answer
74 views

Would Bretton-Woods capital controls have prevented the export-based industrialization of China and the deindustrialization of the West?

I sometimes hear this in a certain kind of political discourse, namely that in the "good old days" of Bretton-Woods capital controls were a thing (I don't dispute this) and that consequently ...
against very long user names's user avatar
1 vote
0 answers
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What are some good alternative textbooks in international trades for undergraduates other than 'Taylor & Feenstra' and 'Krugman, Obstfeld & Melitz'?

I've been referring to the textbooks International Economics by Alan M. Taylor and Robert C. Feenstra and International Trade: Theory and Policy by Marc Melitz, Maurice Obstfeld, and Paul Krugman ...
Hopeless Economist's user avatar
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0 answers
46 views

What is the logic behind Krugman's argumentation about dumping?

I don't quite understand what he is trying to say. As I see it, a lower marginal cost should lead to an increase in export prices, not the opposite.
Jose-Espinar's user avatar
1 vote
0 answers
35 views

Why was the USD rangebound between 1987 and 1995 from an economic standpoint?

I'm trying to understand what caused this long period of range boundedness for the USD index from 1987-1995 from an economic standpoint. From my understanding. In 1985 the USD had reached it's ...
Man Dem's user avatar
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1 answer
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Could Foreign Exchange rates fluctuate under a Gold Standard system?

I recently read an article where it said that during the gold standard, right before world war 1, 1 GBP went from equaling \$4.87 to soaring up to \$6.75 . My understanding always was that Forex rates ...
Man Dem's user avatar
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1 answer
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gravity model of trade

I am conducting an analysis to assess the impact of the CETA trade agreement on trading margins using the gravity equation. One of the challenges I'm facing is how to calculate the distance variable ...
Tamer Elhaija's user avatar
0 votes
1 answer
54 views

Why doesn't imports from receiving country match exports from sending country?

I was looking at import/export data between the Cayman Islands and the Netherlands on tradingeconomics.com (tradingeconomics.com/cayman-islands/imports/netherlands) and (tradingeconomics.com/...
Kris Howerd's user avatar
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1 answer
34 views

What happens when a country trades with a specific country using that country's currency?

Suppose, a country X trades with another country Y using Y's currency rather than widely ...
user366312's user avatar
1 vote
1 answer
60 views

Effect of the construction of the Suez Canal on economies of southern Africa

Merchant ships, before the inauguration of the Suez Canal, used to travel between large parts of Asia and Europe by travelling around Africa. I feel this must have boosted the economies of many of the ...
Ishan Kashyap Hazarika's user avatar
0 votes
1 answer
80 views

Is John Maynard Keynes an economic liberal or an economic nationalist?

I am working on a research project about political economy. However, I stumbled upon differences in the interpretation of the orientation of John Maynard Keynes. Some sources indicate that Keynes is a ...
Nikolay Bogdanov's user avatar
1 vote
1 answer
105 views

BOP balancing to 0, use of capital and financial account

Please someone for the love of god help me. I can't find two sources on the internet that don't have conflicting or very difficult to understand information on the balance of payments. I have various ...
Daniel Rübenacker's user avatar
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0 answers
11 views

How could the economic cost of EORI number requirements in Europe be estimated?

A friend recently tried to ship me my laptop from Romania (a EU member) to Montenegro (a EU candidate member). Even though neither of us is a business, and the laptop was mine and used, my friend had ...
Dan Dascalescu's user avatar
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0 answers
21 views

How does breaking away from a larger nation effect the economy

I am working on making a fictional world, and I really want to make the economics realistic, so I decided to come here to ask questions. The context is that a large nation went through a large civil ...
DanceroftheStars's user avatar
2 votes
1 answer
40 views

Measuring the Overall Effect of Joining a Trade Agreement

The UK has signed a deal to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The BBC comments that, on the government's own estimate, this will add only 0.08% ...
Adam Bailey's user avatar
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2 votes
0 answers
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Interpretation of the Elements of the Leontief Inverse (Total Requirements Matrix)

I found what I believe to be slightly different interetations of the individual elements of the Leontief Inverse (total requirements matrix): Miller and Blair (2009) just after Equation (2.12) mention ...
Wasserwaage's user avatar
1 vote
1 answer
34 views

Factor changes in Melitz (2003) model

What would be the effect of changes in factor supplies, for example labor, on the open economy equilibrium?
Papayapap's user avatar
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6 votes
1 answer
157 views

Does the Rybczynski theorem also hold in modern trade theory models?

Does the Rybczynski theorem also hold for modern Melitz (2003) type trade models?
Papayapap's user avatar
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-1 votes
1 answer
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What is the economical perspective of the value of an egg globally if we take in some hypothetical considerations?

I am fairly new to economics and doing some research, so pardon my lack of knowledge on the topic if this is a dumb question. The main question i have is: Does an egg have the same value around the ...
user2707590's user avatar
2 votes
0 answers
88 views

Questions regarding Solving Melitz (2003) model

I am editing my question regarding solving the model in order to be more specific. Regarding the demand side, In the beginning of the model, we have a CES utility function over a continuum of goods ...
zmhs's user avatar
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1 vote
0 answers
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US WTO Most favoured nation tariffs higher than bound tariffs. Why?

.....so I was reading this: https://blogs.worldbank.org/trade/picture-trade-types-tariffs-explained "Bound Tariffs are specific commitments made by individual WTO member governments. The bound ...
Studi's user avatar
  • 405
0 votes
2 answers
93 views

Trade and Opportunity Cost

This is a question on opportunity cost. I had problem in solving the last part. Please help me out.
Shreevani's user avatar
1 vote
2 answers
127 views

What actually is comparative advantage?

Is comparative advantage determined by simple productivity? In other words, a production function that takes in... some kind of input, uses labor, and capital, and produces an output? In this case, is ...
john's user avatar
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0 votes
1 answer
55 views

How would the world economy change if intercontinental transport was five times more expensive than today?

I am asking this question in light of climate change mitigation. I am working with the assumption that many ways of emitting green house gases can be stopped with better technologies. Electric cars ...
Robert Jack Will's user avatar
0 votes
1 answer
323 views

What is the acquired advantage theory in international trade?

Is it the comparative advantage or absolute advantage or something all together different?
Alex cooper's user avatar
1 vote
2 answers
138 views

How did empires make wealth out of empire-colony trade?

It is commonly discussed that one way the empires of 16-18th would receive wealth from colonies is: Get raw materials from a colony Transport them to the empire Make more sophisticated products out ...
Антон Бугаев's user avatar
3 votes
1 answer
258 views

Was the council bill system used in British India a wealth extraction mechanism?

Jason Hickel says that the council bill system used to pay exporters of Indian goods during the British Raj was a mechanism by which Britain extracted wealth from India without giving India anything ...
Edward H's user avatar
1 vote
1 answer
55 views

Reference request: book on international trade theory will full mathematical derivations

I am doing some self-study on international trade theory, and have been using the book by Feenstra Advanced International Trade Theory as my textbook. The book is good and relatively rigorous, but my ...
krishnab's user avatar
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38 votes
2 answers
7k views

Why does Taiwan dominate the semiconductors market?

The recent visit of US politician Nancy Pelosi to Taiwan generated a lot of news about the dependence the world has on Taiwan, given its dominance of the semiconductor market. But I couldn't find ...
sourcream's user avatar
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0 votes
0 answers
31 views

Why do certain modern country leaders care about trade deficits so much?

A central tenet of mercantilism is that every country should strive to have favorable balance of payments. However, this theory has long been abandoned (or so it seems), but leaders still appear to ...
J Li's user avatar
  • 291
1 vote
1 answer
27 views

How to get Customs data for importing companies?

I am looking for customs data for importing companies for each country. I found some of them, for instance Canadian Importers Database But I wonder if any of you know the additional free sources. ...
John Owen's user avatar
2 votes
3 answers
288 views

If the value of the currency of an economy rises, then is it less desirable to trade with that economy?

I recently heard on a video that when the value of the currency of an economy rises, it is less desirable to trade with that economy. I couldn't understand it.
Brandon Cunnigham's user avatar
-4 votes
1 answer
78 views

Would the more robust global economy resulting from the abolition of trade be worth any costs? What would happen to the economy?

How can a giant volcanic eruption devastate the world? Aside from the immediate fatalities, the eruption can devastate the world’s economy and climate cannot be understated. A good comparison would be ...
A. N Asker's user avatar

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