International Economics, 10e (Krugman/Obstfeld/Melitz) Chapter 6
... Page Ref: 132-135 Difficulty: Difficult 11) If a small country were to levy a tariff on its imports then this would A) decrease the country's economic welfare. B) have no effect on that country's economic welfare. C) increase the country's economic welfare. D) change the terms of trade. E) raise pri ...
... Page Ref: 132-135 Difficulty: Difficult 11) If a small country were to levy a tariff on its imports then this would A) decrease the country's economic welfare. B) have no effect on that country's economic welfare. C) increase the country's economic welfare. D) change the terms of trade. E) raise pri ...
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... – A country has an absolute advantage in a production of a goods if it has a lower unit labor requirement than the foreign country in this goods. – Assume that aLC < a*LC and aLW < a*LW • This assumption implies that Home has an absolute advantage in the production of both goods. Another way to see ...
... – A country has an absolute advantage in a production of a goods if it has a lower unit labor requirement than the foreign country in this goods. – Assume that aLC < a*LC and aLW < a*LW • This assumption implies that Home has an absolute advantage in the production of both goods. Another way to see ...
here. - Department of Economics Sciences Po
... Consider Fig.2. It represents the situation of a country which originally refuses to engage in international trade for ideological reasons. 1. Which point in the Figure must it choose to produce so as to maximize its economic welfare? Suppose that PA /PB is originally (i.e. in autarky) equal to 1. 2 ...
... Consider Fig.2. It represents the situation of a country which originally refuses to engage in international trade for ideological reasons. 1. Which point in the Figure must it choose to produce so as to maximize its economic welfare? Suppose that PA /PB is originally (i.e. in autarky) equal to 1. 2 ...
International Trade
... surplus of exports over imports), it would enjoy payments received from the rest of the world in the form of gold and silver. The more precious metals a nation had, the richer and more powerful it was. To promote a favorable trade balance, the mercantilists advocated government regulation of trade. ...
... surplus of exports over imports), it would enjoy payments received from the rest of the world in the form of gold and silver. The more precious metals a nation had, the richer and more powerful it was. To promote a favorable trade balance, the mercantilists advocated government regulation of trade. ...
Competitive Advantage of Nations
... Theory of Absolute Advantage Adam Smith: Wealth of Nations (1776). Capability of one country to produce more of a product with the same amount of input than another country. Produce only goods where you are most efficient, trade for those where you are not efficient. ...
... Theory of Absolute Advantage Adam Smith: Wealth of Nations (1776). Capability of one country to produce more of a product with the same amount of input than another country. Produce only goods where you are most efficient, trade for those where you are not efficient. ...
18.2 the gains from trade
... • Brings costs, especially in terms of a slowdown in jobs growth, outweigh the benefits. • Increases U.S. imports faster than U.S. exports ...
... • Brings costs, especially in terms of a slowdown in jobs growth, outweigh the benefits. • Increases U.S. imports faster than U.S. exports ...
research paper series Research Paper 2006/10
... significance” is rooted in the empirical attractiveness of Helpman’s prediction. First, by being a bilateral prediction, it accommodates an empirical inquiry for any subset of trading countries for which high quality data is available. Second, it requires no assumptions about consumer preferences. T ...
... significance” is rooted in the empirical attractiveness of Helpman’s prediction. First, by being a bilateral prediction, it accommodates an empirical inquiry for any subset of trading countries for which high quality data is available. Second, it requires no assumptions about consumer preferences. T ...
The World is Flat -- A New Perspective of International Trade
... International Trade, Dr. Miaojie Yu, CCER, Fall 07Copyright © 2006 Pearson Addison-Wesley. All rights reserved. ...
... International Trade, Dr. Miaojie Yu, CCER, Fall 07Copyright © 2006 Pearson Addison-Wesley. All rights reserved. ...
Lecture note 1
... As before assuming all three farmers entered into these trades voluntarily, it must hold that each one is better-off than they would be in the absence of trade. However, we can also compare the fate of each farmer relative to the previous week. Farmer Smith is a clear winner. He can now consume twic ...
... As before assuming all three farmers entered into these trades voluntarily, it must hold that each one is better-off than they would be in the absence of trade. However, we can also compare the fate of each farmer relative to the previous week. Farmer Smith is a clear winner. He can now consume twic ...
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... Suppose, as a result of various dynamic factors associated with exposure to international competition, Albania’s economy grew, and is now represented by the rightmost production possibility frontier in the Figure above. If its point of production with trade was point c, would you consider this growt ...
... Suppose, as a result of various dynamic factors associated with exposure to international competition, Albania’s economy grew, and is now represented by the rightmost production possibility frontier in the Figure above. If its point of production with trade was point c, would you consider this growt ...
19.2 the gains from trade
... produce equipment and armaments and those on which the defense industries rely on for their raw materials. This argument does not withstand close scrutiny. • In a time of war, all industries contribute to national defense. • To increase the output of a strategic industry, it is more efficient to use ...
... produce equipment and armaments and those on which the defense industries rely on for their raw materials. This argument does not withstand close scrutiny. • In a time of war, all industries contribute to national defense. • To increase the output of a strategic industry, it is more efficient to use ...
Document
... manufacturing and assembly may be more labor intensive. The theory of factor proportions suggests that different countries may have a comparative advantage in producing a given step in the value chain. South Korea, for example, is relatively more labor abundant than the United States and may be expe ...
... manufacturing and assembly may be more labor intensive. The theory of factor proportions suggests that different countries may have a comparative advantage in producing a given step in the value chain. South Korea, for example, is relatively more labor abundant than the United States and may be expe ...
2 Classical International Trade Theories
... one unit of cloth with 1 / 3 unit of wine instead of 2 / 3 unit of wine as in autarky system, trade also benefits Portugal. In this example, we fixed the barter price in open economies with one unit of wine for 3 units of cloth. It can be seen that mutual gains can occur over a wide range of barter ...
... one unit of cloth with 1 / 3 unit of wine instead of 2 / 3 unit of wine as in autarky system, trade also benefits Portugal. In this example, we fixed the barter price in open economies with one unit of wine for 3 units of cloth. It can be seen that mutual gains can occur over a wide range of barter ...
Chapter 2
... • Another way to see the gains from trade is to consider how trade affects the consumption in each of the two countries. • The consumption possibility frontier states the maximum amount of consumption of a good a country can obtain for any given amount of the other commodity. • In the absence of tra ...
... • Another way to see the gains from trade is to consider how trade affects the consumption in each of the two countries. • The consumption possibility frontier states the maximum amount of consumption of a good a country can obtain for any given amount of the other commodity. • In the absence of tra ...
Chapter Organization Introduction The Concept
... In the Ricardian model, a country will export that commodity in which it has comparative (as opposed to absolute) labor productivity advantage. Copyright © 2003 Pearson Education, Inc. ...
... In the Ricardian model, a country will export that commodity in which it has comparative (as opposed to absolute) labor productivity advantage. Copyright © 2003 Pearson Education, Inc. ...
Chapter 2 Labor Productivity and Comparative Advantage: The
... good Y (wine) is the amount of good Y (wine) that can be exchanged for one unit of good X (cheese). • Examples of relative prices: – If a price of a can of Coke is $0.5, then the relative price of Coke is the amount of $ that can be exchanged for one unit of Coke, which is 0.5. – The relative price ...
... good Y (wine) is the amount of good Y (wine) that can be exchanged for one unit of good X (cheese). • Examples of relative prices: – If a price of a can of Coke is $0.5, then the relative price of Coke is the amount of $ that can be exchanged for one unit of Coke, which is 0.5. – The relative price ...
Lesson 8 Economics of Trade
... • Overall, more apples and peaches are produced. • Canada has an absolute advantage in apples and the USA has an absolute advantage in peaches. • Canada and the United States will trade • Canada will trade apples for peaches and the USA will trade peaches for apples ...
... • Overall, more apples and peaches are produced. • Canada has an absolute advantage in apples and the USA has an absolute advantage in peaches. • Canada and the United States will trade • Canada will trade apples for peaches and the USA will trade peaches for apples ...
1 - EWP
... which all other countries exploit child or prisoner labor, or are protectionist. On the other hand, Ricardo’s classic demonstration of the sources and effects of comparative advantage cogently demonstrates that regardless of other country policy, free trade remains the first best policy for a countr ...
... which all other countries exploit child or prisoner labor, or are protectionist. On the other hand, Ricardo’s classic demonstration of the sources and effects of comparative advantage cogently demonstrates that regardless of other country policy, free trade remains the first best policy for a countr ...
Chapter 9 The Political Economy of Trade Theory
... which all other countries exploit child or prisoner labor, or are protectionist. On the other hand, Ricardo’s classic demonstration of the sources and effects of comparative advantage cogently demonstrates that regardless of other country policy, free trade remains the first best policy for a countr ...
... which all other countries exploit child or prisoner labor, or are protectionist. On the other hand, Ricardo’s classic demonstration of the sources and effects of comparative advantage cogently demonstrates that regardless of other country policy, free trade remains the first best policy for a countr ...
PPTch04
... • The firm or plant can therefore specialise in a few varieties of the products, so can make use of longer production runs, more specialised machinery and labour, and so on. Other varieties of the product can be imported so consumers may have a wider range of products available at ...
... • The firm or plant can therefore specialise in a few varieties of the products, so can make use of longer production runs, more specialised machinery and labour, and so on. Other varieties of the product can be imported so consumers may have a wider range of products available at ...
chapter 7 Factor abundance
... Later studies, e.g. Bowen, Leamer, and Sveikauskas (1987), analyze more goods, more factors, more countries, as did Trefler (1995) who • finds modest support for neo-classical trade model (about 71%) • shows that factor service trade is smaller than factor endowments prediction (case of missing trad ...
... Later studies, e.g. Bowen, Leamer, and Sveikauskas (1987), analyze more goods, more factors, more countries, as did Trefler (1995) who • finds modest support for neo-classical trade model (about 71%) • shows that factor service trade is smaller than factor endowments prediction (case of missing trad ...
A Story of Trade-Induced Industrialization
... model in which both a traditional and a modern sector can produce final goods that are perfect substitutes. The modern sector uses intermediate inputs that differ in their relative capital intensities, while being both more capital intensive than the traditional sector. The results of this model acc ...
... model in which both a traditional and a modern sector can produce final goods that are perfect substitutes. The modern sector uses intermediate inputs that differ in their relative capital intensities, while being both more capital intensive than the traditional sector. The results of this model acc ...
Jeffery Bergstrand (Notre Dame University): Regionalism, Multilateralism, and Globalization.
... assumed in the standard political economy approaches. The baseline economic model, of course, is the standard two-good, two-factor Heckscher-Ohlin (or factor-proportions) theory of trade, with the corollary Stolper-Samuelson theorem, using perfectly competitive firms and internationally immobile fa ...
... assumed in the standard political economy approaches. The baseline economic model, of course, is the standard two-good, two-factor Heckscher-Ohlin (or factor-proportions) theory of trade, with the corollary Stolper-Samuelson theorem, using perfectly competitive firms and internationally immobile fa ...
Political Economy of Trade Policy
... TOMEŠ - JANDOVÁ: Political Economy of Trade Policy multinational approach to international trade because, in his view, current bilateral and regional free trade agreements put chaos into world trade system. On the other hand, according to Bhagwati, free trade would have a positive effect only in ca ...
... TOMEŠ - JANDOVÁ: Political Economy of Trade Policy multinational approach to international trade because, in his view, current bilateral and regional free trade agreements put chaos into world trade system. On the other hand, according to Bhagwati, free trade would have a positive effect only in ca ...
Free Trade or Protection: A Literature Review on Trade Barriers
... 3.1.4 International Trade’s Competitive effects International trade’s competitive effects generally benefit both global economic welfare and individual liberty. That is generally true of international trade's effects, including reduction of the scope or bite of international regulation: trade-induce ...
... 3.1.4 International Trade’s Competitive effects International trade’s competitive effects generally benefit both global economic welfare and individual liberty. That is generally true of international trade's effects, including reduction of the scope or bite of international regulation: trade-induce ...
David Ricardo
David Ricardo (18 April 1772 – 11 September 1823) was a British political economist. He was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and James Mill. Perhaps his most important legacy is his theory of comparative advantage, which suggests that a nation should concentrate its resources solely in industries where it is most internationally competitive and trade with other countries to obtain products no longer produced nationally. In essence, Ricardo promoted the idea of extreme industry specialization by nations, to the point of dismantling internationally competitive and otherwise profitable industries. Ricardo took as a given the existence of a national industry policy aimed at promoting some industries to the detriment of others. For Ricardo some form of central economic planning was a necessity. Ricardo's theory of comparative advantage has been challenged by, among others, Joan Robinson and Piero Sraffa, but remains the cornerstone of the argument in favour of international free trade. Comparative advantage was the theoretical forerunner of the push towards globalization via increased international trade which is the guiding theme in the economic policy programme currently promoted by the OECD and the World Trade Organization, where it is assumed that increased international trade will lead to economic prosperity. The results of the implementation of this type of policy agenda are debated by some but accepted by mainstream economics. Although his influence on economics has been considerable, Ricardo actually began his professional life as a broker and financial market speculator. He amassed a considerable personal fortune, largely from financial market manipulation. Once retired, he bought a seat in the U.K. Parliament. He held his parliamentary seat for the last four years of his life. Ricardo died at the age of 51.