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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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With adoption of CNH, will China stop buying US Treasury securities?

From what I've been reading, China's been using much of the USD it gets from selling exports, to buy US bonds. With China recently loosening its grip on the renminbi in order to make it an ...
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Balance of Payments for US Not Zero

I am following the lecture notes here http://coin.wne.uw.edu.pl/brokicki/wsp_images/oem___set_1.pdf which says balance of payments for a country, is zero CA + KA + FA + SD + RES = 0 The variables ...
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What does China do with the USD it gets from its trade surplus?

The US has trade deficits with China amounting to several hundred billion dollars each and every year. This means annually there is several hundred billion USD flowing into Chinese hands. These ...
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Is there any stock issued in foreign currencies?

We have international bond issued in different currencies (domestic and foreign). Do we have the same fact for stocks? for example, my company in Switzerland may issue some stocks in CHF, can I issue ...
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How will Trump’s tariffs affect North Korea?

How will Trump’s tariffs affect North Korea? Do tariffs mainly worsen the condition of the North Korean economy?
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Do proposed Chinese import tariffs apply to assembled products?

Are the tariffs proposed by the Trump administration against China inclusive of products assembled with listed items or only with the items themselves? https://www.wsj.com/public/resources/documents/...
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All World Transactions By Currency

I'm looking for an economic source of all transactions worldwide by currency, or an estimate. As an example, China said they will only be accepting CNY for oil imports. That article says total oil ...
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Shipping Manifests

I am attempting to do research on Shipping Manifests and have several questions about them. I am basically asking if any of you guys know of any reliable sources you could point me towards on the ...
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When interest rates in the US increase, dollar is stronger but savings increase. So what happens to imports?

If interest rates rise in the US compared to some nation that exports to the US, then the currency of the US becomes worth more relative to the currency of the other nation. This is good news for the ...
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Dornbusch-Fischer-Samuelson model optimization

I have a basic utility function in Dornbusch-Fischer-Samuelson model to be optimized: $u=\int_{0}^{1}b(z)\ln c(z)dz$ with budget constraints as follows $\int_{0}^{1}b(z)c(z)dz\leq Y$ and $\int_{0}^{1}...
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Is there an index or ranking of countries based on availability of trade finance instruments?

I'm looking for an index or ranking of countries based on the availability of trade finance instruments such as letter of credit facilities, forfaiting etc. I found one by Eurmoney, but the document ...
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What exactly is the XX curve in the DD-AA model?

This is a short run analysis 1) What exactly is the XX curve? Is it the desired CA level? 2) Why is the XX curve flatter than the DD curve? Say on a point on the DD curve above the equilibrium level,...
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Why were European manufacturers eased by Trump's action?

Consider this quote from The Economist: In truth, business sentiment in France and elsewhere was ticking up before Mr Macron’s success. The gradual emergence of animal spirits was encouraged by an ...
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Terms of trade and economic development of developing countries

It has been argued that economic development of developing countries has been held back by persistent fall in terms of trade of developing countries over the long run. Which are the factors that might ...
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How to derive total imports & exports from Input-Output Table?

I'm working with a regional Input-Output Table which is similar to those of the World Input-Output Database. As far as I know, it should be possible and fairly easy to derive total exports and ...
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HO Model with Chinese Yuan appreciates, what would happen to US overall welfare?

Consider a HO model, where China is labor abundant and US is capital abundant. There are two goods, labor intensive manufacturing goods and capital intensive R&D service. In free trade, if China's ...