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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Can anyone recommend a resource for monthly trade data for Mexico from before 2010?

Can anyone point me to a resource where I can find monthly series data (specifically for 2003-2013) on Mexico's imports and exports in nominal (current) Mexican Pesos (MEP) including broken down by ...
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221 views

Gravity Equation Interpretation

I have a question about the gravity equation. In the Feenstra textbook, on page 144, it is stated that In the monopolistic competition model [...] the countries are completely specialized in ...
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210 views

In the Ricardian model, why are two out of 3 cases invalid?

I am considering the Ricardian model. There is an economy with two countries $S,T$. Two goods $a,b$. Each country has linear production technology with labor ($\ell$) as only factor of production. $...
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How is wealth created? [duplicate]

The production of 'goods and services' and 'innovation' is the usual answer. I feel that doesn't really answer the question. These things can be traded for wealth but they don't generate new wealth. ...
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Eric Reinert's conspiracy theory?

After read Eric Reinert's "How Rich Countries Got Rich ... and Why Poor Countries Stay Poor", I've got the question: Reinert theory is: Rich West countries are investing to advanced branches at ...
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183 views

What exactly is the argument for Free Trade?

There's been a lot of talk about Free Trade. People seem to either know nothing about it, or they seem to either support or oppose it with such passion that if you didn't know any better, you would ...
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43 views

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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748 views

How does trading create value? [closed]

Let's say village A has all the something S they need, and village B has all the something T they need. The properties of S outweigh the benefits of T. Village A and village B start to trade S for T. ...
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51 views

EU and North America with CETA

The CETA trade deal is supposed to involve only the EU and Canada, but Canada has already a trade deal with the USA and Mexico : I don't understand how this is possible. For example, if I own one ...
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What's good about both exports and imports of a country rising at the same time?

I recently came across a question that asks, if exports in a country rises by USD10 billion and imports rises by USD10 billion, what's good about both of these? To my understanding, the GDP wouldn't ...
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374 views

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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150 views

Concept of absolute advantage

Can someone please explain the concept of absolute advantage with an example? I know it has to do with the fact that a nation should produce a commodity that is cheap relative to other commodities but ...
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Who exploits comparative advantage in international trade?

Suppose that under autarky, Colombia makes coffee and cars at \$1 and \$2 each, and Japan makes coffee and cars at \$20 and \$10 each. Since Japan has a comparative advantage in car manufacture, the ...
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How is Comparative Advantage a superset of Absolute Advantage? [duplicate]

Source: 'The Theory of Comparative Advantage - Overview', Prof Steven M. Suranovic Advantageous trade based on comparative advantage, then, covers a larger set of circumstances while still ...
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107 views

Is comparative advantage only beneficial with convex utility functions?

I've been playing around with the numbers associated with the traditional comparative advantage problem provided by Ricardo. (https://en.wikipedia.org/wiki/Comparative_advantage) I looked at ...
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Ricardo's theory of comparative advantage for many countries

In textbooks on economics the Ricardo theory of comparative advantages is explained on the example of two countries with two goods. I suppose, there must be generalizations of Ricardo's theory for ...
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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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136 views

What is the proof for why border adjustments are exactly offset in theory by currency appreciation?

Why is it true, in theory, that border adjustments are exactly offset by currency appreciation? I've read the colloquial explanations online, but am looking for something more rigorous. For example, ...
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78 views

What is the name given to an exporting-only economy?

In international trading there can be an economy that only exports, but restrict the import to minimum or at all. I cannot recall what the name given to this type of economy.
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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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2answers
217 views

How exactly can blockchain technology be used to make a supply chain more efficient?

I am a software developer, and have been studying Bitcoin, Ethereum and blockchain technology over the last 8 months or so. I have read a lot on the Internet about how blockchain technology will ...
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61 views

Understanding the effects of government deficit on international trade

Understand that I'm a total novice with regard to economics. Also, while I ultimately have an axe to grind (doesn't everyone?) I'm not trying to do that honing here, I'm simply looking for a sanity ...
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Have UK exports (goods and services) to Ireland declined in value since 2011?

Where can I find the relevant Office Of National Statistics data on UK exports to Ireland? I want to know if the value of UK exports to Ireland has declined since 2011 and if so, does anyone know why ...
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2k views

Converting current to constant USD values for trade data (UN Comtrade)

I am using WB (country GDP) data in combination with UN Comtrade (bilateral trade) data. I need to divide bilateral trade by GDP so as to find out which % of a country's GDP comes from bilateral trade....
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408 views

How can we estimate the tax incidence from a 20% tariff on Mexican goods?

President Trump has proposed a 20% tariff on some Mexican imports to the US. Is there a good way to estimate the incidence of this proposal between the Mexican producers and American consumers, as ...
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Why don't prices of USA labor and Mexican labor equalise?

That Mexicans workers get paid less US workers is a dynamic which motivates the moving of production to Mexico. This idea can be abstracted to Developed Markets (DM) labor and Emerging Markets (EM) ...
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Are there plausible scenarios for the U.S. dollar to fall out of use as the world's reserve currency?

The U.S. has maintained an overall trade deficit for decades, essentially exporting money. For many countries this fund of 'ex-patriated' dollars has been a big tool of trade. Everyone accepts dollars....
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188 views

Are Terms of Trade reciprocal?

I am trying to learn the meaning of Terms of Trade, but I'm confused. From the wikipedia article, it says that TOT is the ratio of the value of exports over imports, and since for the other country ...
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295 views

What is the name of the economics free trade “punnett square”

I remember doing these in High School.It was a 2x2 square, where you could work out the math to show that countries were better off focusing on their efficiency/competitive advantage, and that free ...
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196 views

Must total world net exports be zero?

On the Wall Street Journal Op-Ed page (Trump’s Real Trade Problem Is Money ), John D. Mueller discusses the gold standard and claims something that I've either never heard before, don't understand, ...
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121 views

Is the Trans Pacific Partnership good or bad for the U.S?

I've explored a number of different articles and some say it's good because american consumers/business aren't impacted by the tarrifs, however some other sources say we barely export anything to the ...
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58 views

How are petro states able to maintain gasoline subsidies without black market export smuggling?

I don't understand how petro states can have crazy low gasoline prices without smugglers exporting the gasoline and selling it elsewhere. For example, in Venezuela the domestic price of gasoline is ...
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What factors allow manufacturing to succeed in a developed country?

I am undertaking some research regarding differences between manufacturing sectors across countries. I have noted that China has taken a lot of the less skilled manufacturing work away from developed ...
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106 views

How does the U.S agriculture subsidy not constitute export subsidies under the WTO?

The WTO explicitly prohibits subsidies on export goods to prevent dumping and market distortion but the United States spends $2.4 Billion annually on corn subsidies ...
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How do currency traders resolve imbalances in the demand for different currencies?

Countries trade different amounts of goods that are inherently imbalanced. How do currency traders resolve these imbalances in the demand for different currencies? For example.... Imagine we have two ...
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28 views

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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1answer
50 views

Restrictions on goods and capital, but freedom of labour movement

I recently had a discussion with a left-wing friend in the UK about about Brexit, and the possible repercussions of restriction of labour when the UK leaves Europe. He argued that as someone who is ...
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1answer
78 views

Did the dollar depreciate when Trump won the election?

I expected the the dollar to briefly depreciate against all currencies when Trump won the election (in 2016), but I have just learned that it briefly appreciated against some. It depreciated against ...
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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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1answer
32 views

How can a one currency gain against the other if it is pegged aginst it?

I have been reading about when the Swiss national Bank decided it would no longer peg its currency against the euro and this caused massive turmoil in the markets. But my question was before this the ...
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32 views

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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62 views

How do Trade Costs work in International Trade?

I'm currently reading a paper about trade costs in international trade, but I really struggle to understand the following passage: A rough estimate of the tax equivalent of “representative” trade ...
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175 views

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 don't shipping businesses own their own shipping containers?

About two or three years ago I attended a talk by a consulting statistician, one of whose clients was a company in the business of leasing out intermodal shipping containers. He said those who are in ...
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48 views

Effect of trade on voting

It is a common conception these days that exposure to international trade and its adverse effects is a major factor in the rise of protectionist parties or candidates in the most advanced economies (...
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Long term trade data request

Can anyone recommend a resource for very long term trade data? (1500-2014). I have looked and found bits and pieces here and there but haven't come across any single data-set covering all of it. I am ...
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1answer
2k views

Difference between 'ideal variety' and 'love of variety' - International trade

What really is the difference between the "ideal variety" (Lancaster) of a differentiated product approach and the "love of variety" (Dixit and Stiglitz) approach?
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Correct way to measure Defence budget of a country like India [closed]

I read that defence budget of the country is 2-3% of GDP, but isnt GDP irrelevant when we are talking about expenditure? Shouldn't it be in a ratio of military import/total import?
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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 ...