PARTⅠTrade theory ch117.docx

1、PARTTrade theory ch117Preface1. Some distinctive features of International Economics: Theory and Policy.This book emphasizes several of the newer topics that previous authors failed to treat in a systematic way:Asset market approach to exchange rate determination.Increasing returns and market struct

2、ure.Politics and theory of trade policy.International macroeconomic policy coordinationThe word capital market and developing countries.International factor movements.2. Learning features:Case studies Special boxesCaptioned diagramsSummary and key termsProblemsFurther reading3. Reference books:美保罗克鲁

3、格曼，茅瑞斯奥伯斯法尔德，国际经济学，第6版，中译本，中国人民大学出版社，2007.李坤望主编，国际经济学，第二版，高等教育出版社，2005. Dominick Salvatore, International Economics, Prentice Hall International，第9版，清华大学出版社，英文版，2008.Chapter 1IntroductionNations are more closely linked through trade in goods and services, through flows of money, and through investme

4、nt than ever before.1. What is international economics about?Seven themes recur throughout the study of international economics:The gains from trade(National welfare and income distribution)The pattern of tradeProtectionismThe balance of paymentsExchange rate determinationInternational capital marke

5、t 2. International economics: trade and money Part I (chapters 2 through 7) :international trade theory Part II (chapters 8 through 11) : international trade policyPart III (chapters 12 through 17) : international monetary theoryPart IV (chapters 18 through 22) : international monetary policyChapter

6、 2 World Trade: An Overview1 Who Trades with Whom?1. Size Matters: The Gravity Model The size of an economy is directly related to the volume of imports and exports. Larger economies produce more goods and services, so they have more to sell in the export market. Larger economies generate more incom

7、e from the goods and services sold, so people are able to buy more imports. 3 of the top 10 trading partners with the US in 2003 were also the 3 largest European economies: Germany, UK and France. These countries have the largest gross domestic product (GDP) in Europe.Cultural affinity: if two count

8、ries have cultural ties, it is likely that they also have strong economic ties.Geography: ocean harbors and a lack of mountain barriers make transportation and trade easier.2. Distance Matters: The Gravity Model Distance between markets influences transportation costs and therefore the cost of impor

9、ts and exports. Distance may also influence personal contact and communication, which may influence trade. Estimates of the effect of distance from the gravity model predict that a 1% increase in the distance between countries is associated with a decrease in the volume of trade of 0.7% to 1%. Borde

10、rs: crossing borders involves formalities that take time and perhaps monetary costs like tariffs. These implicit and explicit costs reduce trade. The existence of borders may also indicate the existence of different languages or different currencies, either of which may impede trade more.3.The gravi

11、ty model The gravity model is: where a, b, and c are allowed to differ from 1.2. The Changing Composition of Trade1. Has the World Become“Smaller”?There were two waves of globalization.18401914: economies relied on steam power, railroads, telegraph, telephones. Globalization was interrupted and reve

12、rsed by wars and depression.1945present: economies rely on telephones, airplanes, computers, internet, fiber optics, 2. Changing Composition of TradeToday, most of the volume of trade is in manufactured products such as automobiles, computers, clothing and machinery.Services such as shipping, insura

13、nce, legal fees and spending by tourists account for 20% of the volume of trade.Mineral products (e.g., petroleum, coal, copper) and agricultural products are a relatively small part of trade.Multinational Corporations and OutsourcingBefore 1945, multinational corporations played a small role world

14、trade. But today about one third of all US exports and 42% of all US imports are sales from one division of a multinational corporation to another.Chapter 3Labor Productivity and Comparative Advantage:The Ricardian Model*Countries engage in international trade for two basic reasons:Comparative advan

15、tage: countries are different in technology (chapter 3) or resource (chapter 4).Economics of scale (chapter 6).*All motives are at work in the real world but only one motive is present in each trade model.1. The concept of comparative advantage1. Opportunity cost: The opportunity cost of roses in terms of computers is the number of computers that could have been produced with the resources used to produce a given number of roses. Table 3-1 Hypothetical Changes in ProductionMillion Roses Thousand ComputersUnited States 10100South America10