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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14k views

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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1answer
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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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1answer
40 views

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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902 views

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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1answer
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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
180 views

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 ...
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184 views

Retaliating against a foreign country's import tariffs

When Trump imposes tariffs on imports from China, he is hurting American consumers who won't be able to take advantage of cheap Chinese goods. If China was to retaliate by imposing tariffs on imports ...
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Recession and Net Export

When a country's economy is currently in recession (or has entered a recession), will the net export increase or decrease? What will happen to the major trade partner's net export (will it be the ...
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1answer
130 views

Does Household final consumption Expenditure include Consumption expenditure of Imported Goods

From World Bank, I got the Household final consumption Expenditure for many countries across time. I wonder if this consumption includes Consumption expenditure of Imported Goods / Import Volume? If ...
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Economic impacts of Migration on the Labour Market

Many natives don't prefer foreigners taking their jobs, is it actually a bad thing for the countries economy?
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1answer
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Where can I find data on bilateral trade?

Where can I find data on bilateral trade between countries in the world over time? I heard that only International Trade Center has access to this data, but I guess there's a public source. I tried ...
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1answer
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Pascali (2015) Natural Experiment

In The Wind of Change: Maritime Technology, Trade and Economic Development (2015), Pascali estimates various effects on freight rates (i.e. the cost of transport) on outcomes such as trade volumes and ...
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1answer
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Trade in services between the US and China

International trade consists of both goods and services, yet in the case of US-China trade for some reason both the media and official government releases only seem to quote the goods component. So ...
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Why do large financial institutions make international transactions in digital currency?

I've heard that blockchain technology has been used extensively by financial institutions when making international transactions to eachother, with speed and transparency and cryptographic security ...
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1answer
176 views

Heckscher-Ohlin with different technologies

Consider two countries: Home and Foreign that produce two goods, cars and wheat. The production technologies are such that: $q_{c} = K_{c}^{0.5} L_{c}^{0.5}$ and $q_{w} = 0.5 K_{w}^{0.5}L_{w}^{0.5}$ ...
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Import/export by sector/country data source

I am looking for import/exports data by sector and country, with partner countries. The goal is to get a picture of overall imports/exports to/from a specific country with (possibly) all of its ...
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1answer
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Which currency do we consider when talking about trade balance ?

The Marshall Lerner condition and the J curve made sense until one day I noticed that to make sense of all of this , we considered two different currencies. I was told for e.g. in the short run, ...
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Why is Algeria the #2 milk powder importer in the world?

Can anyone explain to me why Algeria, a country of 40 million people is importing almost half as much milk powder as China? Turkey has 80 million people yet it apparently doesn't import milk powder, ...
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Ricardian Trade Model [duplicate]

This is an example taken from Krugman's book: Consider the case where the international relative price (of cloth in terms of wine) is $\frac{p_{c}}{p_{w}} = \frac{a_{lc}}{a_{lw}}$. Where $a_{lc}$ ...
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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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1answer
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Terms definition in Balance of Payment

I have problems in distinguishing among terms in the Balance of Payment / the international balance sheet of a nation. As far as I know, on Assets and Liabilities sides of BPM, there are Portfolio ...
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4answers
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Why is it a problem if China starts “dumping” US Treasuries? What does it mean to be dumping?

China has 1.2 trillion dollars worth of us treasuries. Why would it be a problem for them to get rid of all of them? Why would that destabilize the US economy?
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How can China shield its public from the effects of a trade war?

I found an interesting read in the NYTimes today. It read: The Chinese government also has much greater control over the economy, allowing it to shield the public from job cuts or factory closings ...
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1answer
55 views

What type of protectionist measure is this?

I am currently studying an economics case study on protectionist measures but came across a measure which I have not heard off before, one which research has not shed any light on. The case study ...
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1answer
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Do import tariffs tend to increase a country's exchange rate (if so, why)?

From Prof. Stiglitz' Vanity Fair article: How, one might ask, is this possible, given Trump’s rhetoric, his determination to move against China with a 45 percent tariff? There’s a global ...
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1answer
58 views

Does Russia Prevent Gold Exports?

The Sirius Report tweets: Surprises me how anyone imagines that #Russia only has 1800+ tons. Just look at the fact that they never export #gold production and what they have annually produce for ...
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551 views

Abolishing all tariffs without reciprocity

Is a policy of abolishing tariffs without expecting other countries do so a sustainable economic policy? What are the arguments for or against it? Fear of imports is very common among people. Money ...
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1answer
633 views

What are production limiting programmes?

Under WTO domestic support norms, blue box measures include: Direct payments under production limiting programmes (often referred to as “Blue Box” measures) are exempt from commitments if such ...
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What are some critiques to the principle of comparative advantage?

The principle of comparative advantage says that, in a free market, any agent should produce more of the goods for which they have a comparative advantage. The model is usually applied to advocate for ...
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1answer
53 views

How should I define most of the import or export when doing analysis of the import and export of a country?

let's say I'm analyzing the import of France and it is 100 billion dollars and is divide between 200 countries. how should I gauge where has most of the import come from? top 10? 90 percent of the ...
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4answers
113 views

Value vs. Price and its relation to tariffs

I’m naturally against tariffs as they impede on free trade, and end up hurting the consumer by inadvertently becoming a tax on imports as well as raising the cost of goods. So I'm trying to challenge ...
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Is there merit to the argument of reducing the US trade deficit

Is the merit to the argument of reducing the US trade deficit and the inequitable tariff regime imposed by its trading partners that works unfavorably towards the US. Does this give merit to the ...
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2answers
290 views

What causes the US media obsession with tariffs; The EU and others have charged tariffs on US stuff forever?

The EU has about a 50% tariff on US beef and higher tariffs on US liquor (typical EU bureaucracy has many categories and quotas, so a single number is impossible). So why is a relatively low US tariff ...
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2answers
45 views

Exports: How can a small amount of export make really high income

I'm currently researching for a school project about Thailand. I found the wonderful Observatory of Economic Complexity Website. There are two visualizations I don't quite understand: https://atlas....
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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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Does Chile have a government owned Export Import bank like the US or India?

If not, what type of trade financing do Chilean exporters or importers get? Is it all from private banks and insurers?
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Does trade lead to economic growth in the most basic models of trade?

In the standard models of trade, such as Ricardo or Hecksher-Ohlin, I know that openness to trade will lead to increased consumption as (roughly) the consumption possibility frontier expands beyond ...
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1answer
39 views

Ban an import that is exported

Norway intends to shutdown the fur farming industry over the next 5+ years. In the meantime, can Norway ban imports and sales of fur without violating WTO regulation? Are there alternative strategies?...
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Why U.S Import from China is a big deal?

Economics books often quotes import as a borrowing Why it is borrowing since the importer pays to exporter for the goods they have received. Lets say, a US company is importing apparel from China.
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Math in Melitz and Ottaviano (2008)

I am reading Melitz and Ottaviano (2008), but I find it hard to understand some math in the model. The preference is given by : , which implies a demand function: Then the paper says the "inverse ...
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1answer
168 views

How can a RTA have a trade imbalance with itself?

I'm looking at ASEAN data for 2015. It seems the intra-ASEAN exports are 305bn USD while the intra-ASEAN imports are only 238 billion USD. Am I misreading the statistics or is it actually possible for ...
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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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