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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44 views

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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What are some of the barriers to trading services?

As I understand it countries negotiate free trade agreements in services using the WTO GATS. But what are some of the barriers to the transnational exchange of services that an FTA would seek to ...
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What international payment systems do exist?

I recently read up on the Society for Worldwide Interbank Financial Telecommunication (SWIFT). As faar as I understood it was up until recently the only provider of a system to exchange money ...
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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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Why does capital flight cause inflation?

Context: I was watching a video about Venezuela, and, it all started with capital flight due to poor confidence in the government. The government tried to stop it, and in the process it created a ...
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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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Do sanctions work?

When countries commit "economic crimes"---ie, theft of intellectual property, dumping, currency manipulation---are sanctions effective at making them stop? I am specifically looking for examples of ...
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Are services included in the calculation of a trade deficit?

Are services included in the calculation of a trade deficit? Presumably measuring service exports is more difficult/less accurate(?) than for goods?
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What arguments are there in favor of national food self-sufficiency?

National food self-sufficiency is an idea that appeals to many non-economists. For example, George W. Bush (2001): It’s important for our Nation to be able to grow foodstuffs to feed our people. ...
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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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663 views

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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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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110 views

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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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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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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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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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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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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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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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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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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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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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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Effects of tariffs on company

How would Trump's tariffs affect an American multinational company? Would the goods that they produce be considered imports?
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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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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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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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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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Effect of policies on Aggregate Demand.

Expenditure dampening policies may be used to correct a current account deficit. This involves contractionary monetary and fiscal policy. I understand that such measures induce a reduction in ...