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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How does a bank convert one currency to another?

Say for example I sell ZAR and buy USD. What happens behind the scenes so that the local ZAR bank is able to deposit USD into my account? Does the bank require some sort of USD cash reserve? How do ...
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advice on econometric or methodological approach of my master thesis

For my master thesis, I am studying the effect of input trade liberalizaion on Research and development decision depending on firms' financial constraints in India. I have a firm level database from ...
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Are there agreements in place between the EU and the US to facilitate trade in services?

What agreements are in place between the EU and the US to facilitate trade in services?
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Discrepancy of GDP and International Transaction Releases for Exports

The Bureau of Economic Analysis ("BEA") provides consolidated data from several different government agencies. Currently they provide exports under both a Gross Domestic Product ("GDP") release as ...
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Does the WTO have a mechanism to accommodate states transitioning trade regimes?

If the UK were to leave the EU without a Withdrawal Agreement in place it defaults to WTO trading terms. Does the WTO have a mechanism to accommodate such a transition?
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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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How can the “Share of merchandise imports at current PPPs” be negative?

I'm looking at the Penn World Table 9.0 data, and find that the "Share of merchandise imports at current PPPs" (csh_m) can be negative. For example, ...
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Eaton & Kortum - Technology, Geography, and Trade - How theta impacts geographical barrier

The paper says: Smaller $\theta$ implies more heterogeneity, and thus larger comparative advantage, and hence stronger force for trade relative to resistance $d_{ni}$. Would it be correct to ...
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Volume of trade covered by regional trade agreements

Is anyone aware of statistics about the total volume of trade that happens under regional trade agreements (RTAs)? It's easy to find figures for the number of agreements, but not so easy for their ...
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Why division of labor or specialization boosts productivity

The three reasons given by Adam Smith were: Increased dexterity. Saving of the time which is commonly lost in passing from one species of work to another. The invention of a great number of machines ...
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Trade pattern in Krugman 1991

Studying the model of Krugman, 1991: the one in which good varieties are country-specific so that there is trade because in presence of increasing returns, each good is produced in only one country, I ...
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What sectors would be most affected positively or negatively by Trump´s trade agreement renegotiations?

One of Trump´s stated policies is that he will renegotiate the trade agreements with China and the Canada and México (NAFTA). This renegotiation might go well in which maybe the US gets freer access ...
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Correct Calculation of Balassa Revealed Comparative Advantage (with full trade data)

The typical approach to computing RCA (Revealed Comparative Advantage) is the Balassa definition: $RCA=\frac{\frac{X_cp}{\sum_{p=1}^{P}{X_cp}}}{\frac{\sum_{c=1}^{C}{X_cp}}{\sum_{c=1,p=1}^{C,P}{X_cp}}}...
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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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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 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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Is it unreasonable to expect a country with a large public deficit and the world's reserve currency to not run trade deficits with other countries?

I have heard that country trade deficits are primarily driven by excessive consumer spending and large public deficits, and that having the world's reserve currency means that you will have to run ...
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In practice, are retaliatory tariffs the first step (or among the first steps) in the WTO dispute resolution process?

In theory, retaliatory tariffs probably aren't first step in the WTO dispute resolution process. Instead, the dispute is supposed to go through consultations, which take some 6.6-months on average, ...
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“Increasing trade barriers causes a country’s currency to appreciate”?

Mishkin (2016, p. 476) writes: Barriers to free trade such as tariffs (taxes on imported goods) and quotas (restrictions on the quantity of foreign goods that can be imported) can affect the ...
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Are trade deficits good/bad or neither?

Is there an academic consensus on whether a trade deficit is good/bad or neither? And if that country is in a monetary union, does the answer change because the wealth moved out of the country can be ...
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What does an increase in REER signify?

What does an increase in the real effective exchange rate signify? I read from a news report that (localized for India): Furthermore, REER is calculated in such a way that an increase in its ...
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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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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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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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Where UK finds money to sustain its negative trading balance?

UK had a negative trading balance for the last 20 years. Where does it find money to finance it? Is such situation sustainable?
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Question on an argument in “The Myth of Absolute Advantage”

Brandis (1967) argues that "absolute advantage does not exist" and "that it is a logical impossibility". (See also comment, comment, reply.) My question here is very narrow and specific. I do not ...
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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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What is the new price after an import quota?

For a small domestic market that can buy completely price elastic imports from the world, the price of the good will be at (P world). However, when there is an import quota of quantity (Q3 - Q2), why ...
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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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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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Can not achieving complete factor price equalisation be good for world trade?

I am just wondering whether not achieving FPE is good for world trade. My reason being that is that international trade keeps expanding until complete FPE is achieved, according to the Heckscher-Ohlin ...
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Which model of trade is this?

In a recent article, Paul Krugman showed these equations: Which model is this? What do the symbols denote? Is the first symbol a v or nu?
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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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Why shouldn't the relative prices change in the Heckscher-Ohlin model?

I'm having trouble with the Rybczynski theorem. Let's say there's a migration to the domestic economy, increasing the Labor endowment. It states that the production of the good that uses labor more ...
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Cloth, Corn and Gold: James Stuart Mill example

I don't quite get James Stuart Mill's example of cloth, corn and gold in "Elements of Political Economy". He supposes that 20 yards of cloth takes the same amount of effort to make as 4 quarters of ...
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How does Global Saving Glut flood the market with cash?

When I was browsing the internet last night, I read a couple articles on the Global Saving Glut. And many has ascribed it to be a cause of US financial crsis. My question is how so? The articles argue ...
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Want to read more about medical intellectual property and the TPP

I'm trying to find information about the current state of medical IP protection in countries willing to sign the TPP and the change they will go trough and maybe some impact analysis. I was hoping ...
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how can devaluation of a nation's currency lead to increase in government expenditure, hence facilitating economic growth

how can devaluation of a nation's currency lead to increase in government expenditure, hence facilitating economic growth. I was reading through a textbook and saw that the devaluation of a nation's ...
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Deriving Marginal Product For Hecksher-Ohlin

I'm using the second edition of applied international trade by Bowen and for the HO model, the marginal product with respect to capital ought to be the first term of the final answer (as given in the ...
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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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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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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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Is IP theft more severe in China than in other developing countries?

Why is the media making such a big deal over IP theft in China if it's not more severe than in other developing countries? So is it the case that IP theft is more severe in China than in other ...
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Definition of Heckscher-Ohlin free trade equilibrium

Does anyone know the mathematical definition of the Heckscher-Ohlin free trade equilibrium? Using real analysis methods!
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The Relationship Between Public and Private Debt

In this video, David Graeber says that if the public sector goes into a surplus, then the private sector must go into a deficit, in equivalent proportion. Is this true? Wouldn't this be complicated by ...
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Net capital outflow = Net exports (Net capital imports)?

They say Net Capital Outflow equals to Net Exports(S-I=NX). And they say also that Net Exports is nothing but the Net Capital Imports. Then how come "Net Capital Imports" is same with the "Net Capital ...
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why doesn't every country scale up the prices to the international level?

I live in an Asian country in which the average monthly salary is maybe 300-400 dollars but things (apart from exported goods like laptops or smartphones) are reasonably cheap compared to their price ...
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If regional subsidiaries bypass trade restrictions, why are FTAs needed?

One of the ways corporations trade transnationally in the face of local restrictions on market access is to set up subsidiary companies or regional offices from which trade is conducted. If such ...
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Two deflator series with different base year to proxy real exchange rate

I'm conducting a research in which the real exchange rate serves as a variable. A quick literature review shows that we can use the product of the nominal exchange rate and the ratio between the US ...
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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 ...