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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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What's a good textbook on International Trade?

My professor for Int. Trade insists on using his unfinished notes as a basis for the class, so I'm looking for an alternative. The syllabus goes as follows: Gains from trade Free trade equilibrium ...
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Heckscher-Ohlin trade model with non-homothetic preferences

$U^j = \prod^N_i \left(d^j_i-\bar{d}_i\right)^\oint$ where $d^j_i$ is the per capita consumption of good $i$ in any country $j$; $\bar{d}_i \geq 0$ denotes the minimum consumption of each good $i$, ...
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On trade, What justificaion does the USA have to accuse China of 'selling too much not buying enough from USA'

There's a trade war (dispute) going on between USA and China, and it boils down to the USA accusing China of not buying enough American products, relative to what they sell to America. Putting aside ...
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What is the relation between the trade deficit and the outsourcing of jobs?

To make it easier, let's imagine USA exports nothing and imports nothing (or the exports have the same value with the imports = 0 trade deficit = the country exports the same amount of jobs as it is ...
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Is Universal Basic Income compatible with free international trade?

If one country introduces UBI, what prevents other countries from taking advantage of that and supplying cheaper (no need to finance a UBI scheme!) goods to the original country and outcompeting the ...
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Bond prices and Trade deficit

Why does the narrowing of trade deficit cause an increase in bond prices? I do understand that narrowing of trade deficit leads to narrowing of capital account surplus. Also, investor confidence ...
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Leontief's Paradox and the amount of capital

Leontief (1953) showed that US exports in 1947 embodied considerably less capital and somewhat more labor than would be required for domestic production of competitive imports. \$2.55 million worth of ...
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How does a budget deficit help grow a trade deficit?

What are the mechanism that explains this, and does this help explain the U.S.-China trade deficits?
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Will liberalizing Chinese service sector worse the U.S. trade deficit with China?

I heard that liberalizing the Chinese service sector would make American companies invest massively in the country to then export engineering services back to the U.S., but is there a consensus or is ...
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Categorisation of Harmonised System codes for economic analysis

I work a lot with Harmonised System Codes (https://en.wikipedia.org/wiki/Harmonized_System). In a nutshell, the Harmonised System (HS) provides a way to record all goods based trade in and out of a ...
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World economy and world trade

What is the difference between the world economy and world trade? I have read in one book saying "US share in the world economy is 28% and in the world trade is 15%" (2008 edition though). Please ...
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Is it correct to say that import tariffs are unilateral?

Is it correct to say that import tariffs are unilaterally decided by the nation or bloc applying the tariff?
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With whom does the US have the largest deficit using the trade in value-added (TiVA) methodology?

The US has the largest gross trade deficit with China. But some economists have argued that this is misleading, e.g. using the iPhone as an example in which most parts don't orginate in China. There'...
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Theory of Optimal Currency Areas

Should a country be more inclined or less inclined to join a currency union (common currency) under the following events: a) Increase in the size and frequency of AD shocks to the economy. b)...
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Are there internationally published sources of trade sanctions?

How to implement embargoes with respect to a trading company? Let's assume i am a small trading agent which assists and guides small exporters and importers while keeping embargoes and light ...
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Determining the Relative Price of Trade

I'm pretty sound with the concept behind comparative advantage, but still don't get how to calculate the exchange rate in terms of quantities of each products being exchanged, e.g. 1 apple for 2 cars ...
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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 ...
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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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Do free-trade agreements typically include clauses relating to services?

Do free-trade agreements typically include clauses relating to services? For example, reciprocal recognition of professional qualifications.
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HHI and concentration [closed]

I calculated the HHI index for Chile exports and got values ranging from 0.09 and 0.13. We know that Chilean exports are very concentrated (around 40% of the exports are copper related goods) and the ...
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Is Iphone included in tariffs?

As the tariffs war getting escalating, I am curious about how the tariffs works on Iphone. Apple is an American company, and Iphone is its product. But manufactured by factory in China. Is there a ...
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Balance of Trade - Currency devaluation in a price taker economy

How will a real exchange rate devaluation affect Balance of Trade, if an economy is a price taker in world markets for both export and import?
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1answer
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Are US-branded products manufactured in China considered Chinese?

Many US-branded products like Apple's are manufactured in China. Are these products considered Chinese when they are imported back to US? And are they thus subject to tariffs?
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IS-LM , Eurozone and Interest Rate Parity

In the IS-LM framework, when the CB expands Money supply, interest rates are driven down, investment is boosted, and aggregate output increases (shift of LM curve, movement along IS curve). In the ...
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Which institution (government or private) provides the complete data on HS (Harmonized System Code), tariff schedules for India, China and US?

Was looking out for options on building a data store having HS code and tariff schedule data for few countries, which I can use as a base for import calculations and general HS lookup. Is there a ...
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Central bank selling foreign securities

According to the Krugman Obstfeld textbook, When a central bank sells foreign bonds, it decreases domestic money supply. My question is: foreign bonds are denoted in foreign currency. Selling these ...
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Paying for imports

In an open economy, a country can either pay for imports by running down its reserves, or by financial inflows. The payment for imports via reserves is easy to understand- an importer can go exchange ...
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Is the trade deficit driven by lack of domestic savings?

NYU Prof Joseph Foudy said the US trade deficit was caused by a lack of domestic savings and that tariffs on China would just shift the deficit to other countries. Zacks says A country’s trade ...
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Basic question on trade based on comparative advantage

The following question is taken from Economics: Principles and Applications 6th Edition, by Hall and Lieberman. This question about applying the theory of comparative advantage between a ...
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China - US Trade War: Holes in this analogy?

I have recently listened to a podcast by Peter Schiff concerning the China - US trade war. Schiff to me is an interesting chap; he always puts an interesting spin on things. However, from time to time ...
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Who performs the checks for regulatory compliance at trade borders? [closed]

Customs officers check for tax compliance at trade borders. But who performs the checks for regulatory compliance at trade borders? Is it simply the various Government ministries (eg the one ...
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Is it true that the U.S has to run a chronic trade deficit with the rest of the world as a price to pay for being the world's reserve currency?

I have heard of the argument that in order for USD to be reserve currecy, the rest of the world must own enough USD to store it as reserves. In order for the rest of the world to own enough USD, U.S ...
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Does China subsidize its exports?

And if so, to what extent? Also, how does the extent of China's subsidies compare internationally? (I understand this is a broad question but I can imagine that some economists somewhere have come ...
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Financing of Current Account Deficit

From the Balance of Payments identity, we have that: $$ CAB+FI=\triangle RES $$ Or that, the current account deficit is financed by either capital inflows, or a change in reserves. My question is ...
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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 ...
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J Curve and DD Schedule in the Short Run (International Finance)

Assume that the J-curve is true. What would the DD curve look like during the early period of the J-curve (where the value effect dominates)? What would the effect of temporary changes in monetary ...
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Buying locally vs abroad

I interested in the net effect of buying locally versus abroad. The UK Government wants to buy a ship. It can buy from a UK or Korean shipyard. The unit price is the same for both yards: £10. A ten ...
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gravity regressions with firm-level data

What are the problems of estimating gravity regressions with firm-level data or industry-level data rather than country-level data?
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How did old international loans work?

On June 11, 1782, John Adams secured a much needed loan for the new Republic from Holland. How exactly did this work in the days of strictly paper currency? What did it mean to loan internationally ...
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Why do we say the US is in debt to China?

Apple import iPhones manufactured by factories in China. Apple has to pay for these Chinese manufacturers. So, Apple should be in debt with Chinese manufacturers. But why do we say the US government ...
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Does National Savings equal zero in a closed economy? Please give an economic intuition

Context: $Y -(C+I+G) = X - M$ In a closed economy, $(X-M) = 0$ Notations Y --> Income/Output C,I,G --> Consumption, Investment and Government expenditure respectively. X --> Exports M --> ...
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How important is “second best optimum” for the modelling and formulation of policy advice?

The standard formulation of second best theory is: if there is introduced into a general equilibrium system a constraint which prevents the attainment of one of the Paretian conditions, the ...
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1answer
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Differences between international and national creditors

When considering a nations debt, how does it affect the nation whether its debt is held by national or international creditors? If there is preference does this translate into different prices for the ...
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What are some famous examples of infant industries that failed?

The Japanese and Korean car and steel industries are often touted as examples of successful infant industries. I'm trying to find some famous examples of failed infant industries. (They don't seem ...
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How is currency depreciation related to import tariffs?

In the news today they were talking about how the US is "threatening to increase proposed tariffs on Chinese imports from 10 percent to 25 percent." One of the reasons they gave for this was that ...
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Is there an dollar estimate of the trade deficit change of the updated KORUS deal?

In March 2018, the Trump administration has struck its first updated trade deal, with South Korea. The list of trade barriers changed doesn't seem too expansive but it does include some potentially ...
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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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1answer
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The term “Most Favoured Nation” is misleading to me. Please explain

My understanding If Country A extends MFN status to Country B with reduced tariffs for a product, then it must treat all other nations in the same way. By this WTO encourages multilateral ...
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What does the Leontief Inverse represent? (Intuitive Meaning or Real World Concept)

I encountered that nobody, even my profs and lecturers so far, has an intuitive way to explain what the Leontief inverse represents. Does somebody here? As most people here would know, it goes: $\ ...
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Do Chinese tariffs on American goods make them more expensive to American consumers?

This CNN article seems to imply that Chinese tariffs on American goods will make them more expensive to American consumers. Is this true? I did think that tariffs by your own country on imported ...