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Slide 1-4
About This Course…
Principle of Economics Theoretical Economics vs. Applied Economics About Mathematics Our stress: concepts & applications
Lecture: week 6-19; Test: week 20 Attendance Assignments & Class Discussions
Slide 1-5
BRIEF CONTENTS
PREFACE 1 Introduction PART I INTERNATIONAL TRADE THEORY 2 World Trade: An Overview 3 Labor Productivity and Comparative Advantage: The
Ricardian Model 4 Resources, Comparative Advantage and Income
Distribution 5 The Standard Trade Model 6 Economies of Scale, Imperfect Competition, and
International Trade 7 International Factor Movements
5
Slide 1-6
BRIEF CONTENTS
PART II INTERNATIONAL TRADE POLICY
8 The Instruments of Trade Policy
9 The Political Economy of Trade Policy
10 Trade Policy in Developing Countries
11 Controversies in Trade Policy
6
Slide 1-101
0
Export
Import
Billion dollars
Exports and Imports of China
0
500
1000
1500
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31
year(1978-2008)
expo
rts,im
ports
Export
Import
Billion Dollars
Slide 1-11
Introduction
What is International Economics About? International Economics: Trade and Money
Slide 1-12
International trade deals with economic interactions that occur between sovereign nations.
(eg. Trade between U.S. & Mexico; Shanghai & Beijing?)
• The role of governments in regulating international trade and investment is substantial.
• Analytically, international markets allow governments to discriminate against a subgroup of companies.
• Governments also control the supply of currency.
What is International Economics About?
Slide 1-13
1.What Is International Economics About?
13
The Gains from Trade
The Pattern of Trade
Protectionism
Micro-part
Slide 1-14
The Gains from Trade• Can & cannot produce by itself.• Why import when a good could be produced domestically?• When countries sell goods and services to one another, all countries
benefit.(ch3, productivity & wage; ch4, production factor abundance; ch6,
economies of scale Specialization & effieicncy _tangible goodsch7, factor movements: international migration & borrowing and
lending._intangible goods)• Trade and income distribution
– International trade might hurt some groups within nations. (eg. specific resources owners; labor and capital owners)
– Trade, technology, and wages of high and low-skilled workers. (disputs) (ch4,ch5)
What is International Economics About?
Slide 1-15
What is International Economics About?
The Pattern of Trade (Who trade with whom or sells what to whom?)
– Climate and resources determine the trade pattern of several goods.
– In manufacturing and services the pattern of trade is more subtle.
(eg. Japan for autos vs. U.S. for aircraft? )
-International difference in labor productivity.(ch3, Ricardo,19C)
-The relative supply & use of national resources such as capital, labor, and land.(ch4,20C, powerful but controversial)
-A substantial random component.(ch6, economy of scale, market structure, policy etc.)
– There are two types of trade
» Interindustry trade depends on differences across countries.
» Intraindustry trade depends on market size and occurs among similar countries.
Slide 1-16
Protectionism? (How much to trade?)• Globalization: for or against? (NAFTA vs. EU? WTO negotiation,
ASIA…) (Seattle)
• Cost-benefit analysis? Many governments are trying to shield certain industries from international competition. (eg. Export subsidizing or import quota)
• Government interventions: politics.
(ch4 income distribution effects; ch9-11 power within countries matters)
• This has created the debate dealing with the costs and benefits of protection relative to free trade.
– Advanced countries’ policies engage in industrial targeting.
– Developing countries’ policies promote industrialization:– Import substitution versus export promotion industrialization.
What is International Economics About?
Slide 1-17
The Balance of Payments• Some countries run large trade surpluses.
– For example, in 1998 both China and South Korea ran trade surpluses of about $40 billion each.
• Global Imbalance
• Is it good to run a trade surplus and bad to run a trade deficit?
Exchange Rate Determination• The role of changing (floating) exchange rates is at the
center of international economics.
What is International Economics About?
Slide 1-18
What is International Economics About?
International Policy Coordination• A fundamental problem in international economics is
how to produce an acceptable degree of harmony among the international trade and monetary policies of different countries without a world government that tells countries what to do.
The International Capital Market• There are risks associated with international capital
markets:– Currency depreciation ( even contagious)– National default
Slide 1-19
19
Macro-part
Exchange Rate Determination
The International Capital Market
International Policy Coordination
The Balance of Payments
返回
Slide 1-20
2.International Economics: Trade and Money
International Economics
International Trade (real transactions)
International Money (financial transactions)
20
Our Focus
Slide 1-21
International Economics: Trade and Money
International trade analysis focuses primarily on the real transactions in the international economy.• These transactions involve a physical movement of
goods or a tangible commitment of economic resources.– Example: The conflict between the United States and
Europe over Europe’s subsidized exports of agricultural products.
– Antidumping case. Customs duties. Cow diseases…
Slide 1-22
International monetary analysis focuses on the monetary side of the international economy. • That is, financial transactions such as foreign
purchases of U.S. dollars.– Example: The dispute over whether the foreign
exchange value of the dollar should be allowed to float freely or be stabilized by government action.
– Should RMB appreciate ? Is it undervalued? If yes, how much is it undervalued?
International Economics: Trade and Money