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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Fairness of U.S. Foreign Trade with China and Japan

I I have a debate coming up this week over the question: Is the U.S. being "robbed blind" through unfair foreign trade practices by China and Japan? The stance I am assigned to is that the current ...
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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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Where to find a brazilian claim from german geologist Eschwege?

In Das Kapital, ch I.1, Marx says that german geologist Eschwege claims that total product of the Brazilian diamond mines for the eighty years ending in 1823 still did not amount to the price of ...
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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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What faction determines the strength of a state's currency and can that faction be rebelled?

I know that to determine the strength of a state's currency (a currency's Equilibrium Price), the following factors are contemplated by some faction, but I don't know what is that faction. ...
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What does 'currency convertibility' mean?

As a student with almost zero background in economics, I've been struggling to comprehend the notion of the currency convertibility. Most of the definitons I've found online talk about the ease with ...
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Testing the Marshall-Lerner Condition

Assuming initially £1=$2 Exports Px £100 QDx1 500 Export Revenue £50,000 Imports Pm1 £50 QDm1 1000 Import Spending £50,000 Trade Balance = £0 After a 10% depreciation of the £ Assuming PEDx = -0....
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Heckscher-Ohlin with non homothetic preferences [duplicate]

Can someone tell me how I can show with an example that the Heckscher-Ohlin result does not necessarily hold when preferences are not homothetic. I was asked if it similar as a case in which the ...
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How does protectionism harm the producers and workers in export sectors in the country implementing the protectionist policies?

According to Protectionism (Protectionism) also reduce trade and adversely affect consumers in general (by raising the cost of imported goods), and harm the producers and workers in export ...
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Perfect multicollinearity when estimating a gravity model

everyone! I am estimating a gravity model in order to analyze the impacts of tighter environmental regulations on international trade. More specifically, I am analyzing Brazil's trade flow. My (...
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Analyse the influence of interior demand and trade on exports

I would like to have a primer on how the current slowdown of the German economy is affecting its partners, for instance France, Spain and Italy. More specifically, if it goes mainly through Germany's ...
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Is there a way to adjust trade data between China and EU member countries for the Rotterdam effect?

Basically Eurostat trade data for individual EU member countries with China seems to have some substantial artefacts probably because most EU imports from China arrive in Dutch ports, even though ...
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How are trade deficits financed?

The usual answer is either "foreign debt" or "Foreign Direct Investment". But: Why does that make sense? And why wouldn't be financed otherwise like from importers taking out bank loans domestically ...
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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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Historically has the “decoupling” of world trade from GDP not lead to (or deepened) a recession?

The ECB speaks (somewhat euphemistically, in my opinion) of a "decoupling" of world trade from "activity" (i.e. GDP) in Q1 2019: Historically, has it been the case that such a "decoupling" can last, ...
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Why is the Australian dollar, often viewed by traders as a proxy for the Chinese economy?

The Australian dollar, often viewed by traders as a proxy for the Chinese economy, gained 0.3 per cent against its US counterpart. From: https://www.ft.com/content/b18d1c56-cf75-11e9-b018-...
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Papers on International Trade and Environment

everyone. As a requirement to get my bachelor's in economics, I have to write a paper. The theme I picked is something along the lines of "the impact of environmental crimes and regulation on ...
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Who paid the bill for cheap Chinese exports?

We have all enjoyed the flow of cheap Chinese imported goods, whether in the shops, or online. The shipping costs from China have always seemed very low. Now I see this note: Got notification ...
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Where does overseas money from exports go?

I am a bit confused about foreign exchange reserves. I was reading this website (https://www.thebalance.com/foreign-exchange-reserves-3306258#targetText=Foreign%20exchange%20reserves%20are%20the,to%...
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Derivation of aggregate demand function for Monopolistic Competition (based on Combes et. al, 2008)

A specialized question for those, who excel in monopolistic competition and modern trade theories. I am interested in a derivation of an aggregate demand function for a model of monopolistic ...
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Why a Current Account deficit implies a Financial Account surplus [duplicate]

Every macro textbook out there states that if a country has a Current Account deficit, it must have a surplus in the Financial account, but I have not heard a convincing explanation. Imagine a ...
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58 views

Whats the math behind calculating the price of cryptocurrency through supply and demand?

"The value of currencies (including most popular cryptocurrencies) is set by a market. Price rises or falls until the supply and demand of the currency are equalized" Why exchange rates of national ...
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Why is trade deficit a good thing?

In general most economist agree that deficit is not a negative thing, but I have trouble understanding why For example if country A has 10\$ and country A runs trade deficit to B of 2\$ per year, ...
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Inflation leads to loss of gold reserves

I am reading Murray's Rothbard What has government done to our money? and this is his reasoning for inflation leading to loss of gold reserves to other countries (...
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Why did no US politician start the trade war a decade earlier with China or possibly the Globe if it is a good thing to do? [closed]

Why did no US politician start the trade war with China (or possibly the Globe) a decade earlier if it is a good thing to do? I am asking for a list of reasons for why not.
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Where to find information on tariffs when importing candles into the U.S.?

I am wondering where I can find information on tariffs when importing scented candles from States like China, India, Vietnam, Thailand into the U.S.? If the candles are soy wax and are packaged in ...
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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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Is the European Single Market a Free Trade Area?

The European Single Market is (obviously) a Single Market. Are Single Markets also free trade areas?
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Does the gravity model of trade apply equally for goods and services?

Does the gravity model of trade apply equally for goods and services? Naively it would seem that the more ephemeral services would be less impacted by it?
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By what mechanism do large economies affect world price with tariffs?

Large economies can affect world prices by applying import tariffs. Is this because they definitionally comprise a substantial portion of global consumption, and hence by shifting production ...
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Can tariffs be said to subsidise domestic industry?

If a state places a tariff on a good, domestic manufacturers of that good become more price-competitive in the domestic market at the expense of overseas suppliers. Could this be said to be a policy ...
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Is protectionism more suited to large economies?

Large economies like the US and China use tariffs as trade weapons while retaining competitiveness because they have the critical mass to encapsulate supply chains and avoid the cost of cross-border ...
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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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Chinese tarriffs (pre-tradewar)

I am trying to understand to what degree tariffs (or other restrictions like quotas) were the cause of the trade imbalances between the US and China. One might imagine that it was simply a matter of ...
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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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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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Are there economic models that predict (only) a medium/long-term negative effect of protectionism?

Going by some ECB models/estimates from last year, protectionism would result in negative consequences pretty fast, e.g. For illustration, I will use the results of simulations carried out by ECB ...
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Are there political economy models that include a “majority capture” of (protectionist) trade policy?

A highly cited model of protectionism is the "protection for sale" model or Grossman and Helpman. (For an [updated] evaluation of that model see for instance the Advanced International Trade textbook ...
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International emissions trading

As far as I have understood emission right certificates are some kind of currency. Each company may emit as much of say CO2 as its certificates allow. Certificates may be traded, i.e. bought and sold. ...
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why US don't like China trade deficit? [duplicate]

Because of the dollar, US basically have unlimited credit. US could simple print money for good. Why US don't like China trade deficit? If US is a person, and the person could use paper to exchange ...