international economics ppt

18 slides Meeting 1 - Introduction to international economics (International Economics) Albina Gaisina 6.9k views 26 slides Subject matter and importance of international economics MUHAMMED SALIM AP ANAPPATTATH 1.4k views 18 slides International economic ch01 Judianto Nugroho 4.9k views 14 slides Opportunity cost theory With trade, Nation 1 specializes in the production of commodity X (L-intensive commodity) and reduces its production of commodity Y(K-intensive commodity), the demand for labor rises causes the wages to rise while the relative demand for capital falls and its rate falls; on the other hand, in Nation 2 wages fall and rate rises; The Factor-Price Equalization Theorem Conclusion 1. International trade tends to reduce the pretrade difference in w and r between the two nations; 2. International trade keeps expanding until relative commodity prices are completely equalized, which means that relative factor prices have also become equal in two nations. a)Goods and Services - Exports, Imports, Services practice questions. assume two goods and two countries. in being poor for a long period of time. <>/Metadata 3497 0 R/ViewerPreferences 3498 0 R>> Organization. Case Studies 1. imports is limited, their price may be forced upward will be greatly affected by the change in the peso Try Microsoft Office Web Apps, which allows you to open, read, and edit PowerPoint files in any Internet browser! (Tariff and Illustration of the Hechscher-Ohlin Theory Conclusion Both nations gain from trade because they consume on higher indifference curve . An increase in the preference of Americans for foreign goods. 3) After trade, Nation 1 will export commodity X in exchange for commodity Y and consume at point E on indifference curve. income, Interest payments to foreign creditors imports. 4.) chapter 10 exchange rates and the foreign exchange market. 2. A decrease in the riskiness of foreign investments relative to U.S. <> Freely sharing knowledge with learners and educators around the world. Nation 2 is K-abundant nation and commodity Y is the K- intensive commodity, Nation 2 can produce relatively more of commodity Y than Nation 1.This gives a production frontier for Nation 2 that is relatively flatter and wider than the production frontier of Nation 1 (if measures Y along the vertical axis). To introduce demand preferences or tastes (demand conditions) to extend the simple model (supply conditions), 3.2 The Production Frontier with Increasing Costs Illustration of Increasing Costs The Marginal Rate of Transformation Reasons for Increasing Opportunity Costs and Different Production Frontiers Comments Conclusion. Relative and Absolute Factor-Price Equalization 5. costs to compete without the help of a tariff. Handout 6, before class, for a PDF handout with 6 slides per page. DIRTY FLOAT Li Yumei Economics &amp; Management School of Southwest University. the exchange rate. 1. Case study 5-2: the capital stock per worker for a number of leading developed and developing countries. of the countrys external transaction. fixed vs. International Economics - . Illustration of Trade Based on Differences in Tastes Explanation of Figure 3.6 1. An increase in the real interest rate on foreign bonds relative to U.S. Or the amount of one commodity that one nation wants to import equals the amount of the commodity that the other nation wants to export. It also means that in the long run commodity prices equal their costs of production, leaving no profit after all costs are taken into account. (Theory, Part II), The Heckscher-Ohlin Model (Empirics, Part I), The Heckscher-Ohlin Model, (cont.) BOP compares the dollar difference of the amount of services in dollars and, therefore they will have to convert their International economics refers to a study of international forces that influence the domestic conditions of an economy and shape the economic relationship between countries. - Involves different currencies. University of Helsinki. endobj . (Theory, Part II), Political Economy of Trade Policy and the WTO (Empirics, Part I), Political Economy of Trade Policy and the WTO, (cont.) lecturer: International Economics - . This gives a production frontier for Nation 1 that is relatively flatter and wider than the production frontier of Nation 2 (if measures X along the horizontal axis). The increasing opportunity costs in terms of X that Nation 2 faces are reflected in the longer and longer leftward arrows in the figure, and result that the PPF is concave from the origin. exchange rates. An interesting case is the Canadian-to-American what determines exchange rates?. exchange to pay interest and maturing obligations on Finally, OpenOffice.org has a suite of programs -- like those in Microsoft Office -- that you can download for free. 3.5 The Basis for and the Gains from Trade with Increasing Costs Illustrations of the Basis for and the Gains from Trade with Increasing Costs Equilibrium-Relative Commodity Prices with Trade Incomplete Specialization Small-Country Case with Increasing Costs The Gains from Exchange and from Specialization Conclusion. PPT - International Economics PowerPoint Presentation, free download - ID:4547556 Create Presentation Download Presentation 1 / 76 International Economics 602 Views Download Presentation International Economics. main contents exchange rates and, International Economics - . This is equivalent to saying that the K/L ratio (capital-labor ratio) is lower for X than for Y in both nations, but not mean K/L ratio for X is the same in both nations. topic 1: international trade theory and policy. the exchange rate is the number of units of one demand for US Lecture 19 slides (PDF) 20. ?xjwm[onQ- th`/]?6yO`H[GS]KW-2__n).Q `w_wuu5o@dcSK;O]1p7i;@;&-JK}ZORnU_W,p]^Ng7JW "real world". (Less) - When cheaper foreign produced goods (Less) - different production possibility frontiers, 3.2 The Production Frontier with Increasing Costs, Reasons for Increasing Opportunity Costs and Different, Reasons for Increasing Opportunity Costs and Different, Illustration of Community Indifference Curves, Some Difficulties with Community Indifference Curves, Equilibrium-Relative Commodity Prices and Comparative. Present acc. This is not always the case. The horizontal axis refers to the amount of labor while the vertical axis refers to the amount of capital, and the slope of the ray measures the capital-labor ratio (K/L) in the production of the commodity; 2. There is incomplete specialization in production in both nations; 6. Again, the U.S. investments become more attractive. Organization. <> Lesson 4 free trade - power point - duke-1, foreign trade as an engine of economic growth, Factor endowments and the heckscher ohlin theory (chapter 5), [International Law] - International Economic Law, 20130126 international economics chap1 introduction, Global Economic Trends with Special Focus on Developing Countries, Financial forces in international business2. <> Nation 2s slope of the rays (K/L) in the production of commodity X and commodity Y; The same meaning in Nation 2, K/L in Y=4 while K/L in X= 1. canada with its. donations And different supply of factors of production in different nations have different factor prices. 1.It serves as the basic link between the local and is important for several reason: Resources or factors of production are not homogeneous (e.g. exchange rate changes and current account reactions. as currency devaluation/currency appraisal. It is this difference in absolute commodity prices in the two nations that is the immediate cause of trade. The main function of foreign exchange is to transfer interest rate currency ) to importers. This is the Case Study 3-1 Comparative advantage of the Unites States, the European Union and Japan Revealed Comparative Advantage () It refers to the excess in the percentage of total exports over the percentage of total imports in each major commodity group for each country or region. irs internal to firm (i.e. With specialization in production and trade, each nation can consume outside its production frontier (which also represents no-trade consumption frontier). The PPF of the two nations are now assumed to be identical, they are represented by a single curve. The effects of trade and migration are part of international economics. level/inflation Increasing opportunity costs arise because resources are not homogeneous and are not used in the same fixed proportion in the production of all commodities. Chapter 3 The Standard Theory of International Trade. Overall BOP 2) Speculators "p{14o4%ryL<9CEU+I487o92W^I3p`9yh 1c Buy now. DIRTY FLOAT, SYSTEM IN WHICH GOVERNMENTS Provide credit for foreign transactions Credit is needed when goods are in transit, and to allow the buyer time to resell the goods to make the payment. CRAWLING PEG SYSTEM, THE CENTRAL BANK WILL SET UP A MAXIMUM AND Reasons for Increasing Opportunity Costs and Different Production Frontiers Reasons for Increasing Opportunity Costs 1. 2 major categories Factor Abundance In Such situation, it is the definition in terms of relative factor prices that should be used. How to show the PPF in each nation with increasing Costs? International Economics. PowerPoint Presentation (Download only) for International Economics: Theory and Policy, 11th Edition Paul R. Krugman, The Graduate Center, City University of New York, Princeton University, University of California, Berkeley Dominick Salvatore International Economics 9th Edition Ppt This includes modeling the . Right panel: With trade the equilibrium point 1) Nation 1 specializes in the production of commodity X while Nation 2 in commodity Y; 2) Specialization in production proceeds until the transformation curves of the two nations are tangent to the common relative price line PB. In other words, the relative capital price (r/w) is lower in Nation 2 than in Nation1. for the U.S. dollar increased due to the brisk importance of has to sell his dollars in exchange for pesos in a And the type and extent of these shifts depend on the type and extent of the changes that take place (details in Chapter 7). ( N=A T,H E) . <> Several factors, all relating to decisions of contact, International Economics - . Bertil Ohlin (1899-1979) Bertil Gotthard Ohlin (pronounced [brtil ulin]) (23 April1899 3 August1979) was a Swedisheconomist and politician. li yumei economics & management school of southwest university. supply for the U.S. dollar is constant while the demand framework wherein individuals, businesses, and banks The forces of supply (as given by the nations PPF) and the forces of demand (as summarized by the nations indifference curves or maps) together determine the equilibrium-relative commodity prices in each nation in autarky. liabilities). Hence they sell their currency to buy most, each nation should give out what it has the most and the (Empirics, Part II). endobj dollars because our customers need to pay for our goods and thereby reducing the import spending of the country. Its principles regarding multilateral trading Heckscher is best known for a model explaining patterns in international trade (Heckscher-Ohlin model) that he developed with Bertil Ohlin at the Stockholm School of Economics. It means that with the more and more output of one commodity the resources or factors are used less efficiently. session, International Economics - . the commodity which it has more and import from country B the commodity The difference in relative commodity prices between nations determines comparative advantage and the pattern of trade, FIGURE 5-3 General Equilibrium Framework of the Heckscher-Ohlin Theory. - ASEAN-China Free Trade Area Chapter Summary To introduce demand preferences or tastes (demand conditions given by community indifference curves) to extend the simple trade model (only supply conditions given by production possibility frontier) with increasing opportunity costs: To determine the equilibrium- relative commodity price in each nation in the absence of trade under increasing costs, and to indicate the commodity of comparative advantage for each nation. CONSTANT AGAINST ONE ANOTHER rate is often examined. Erratum: In Figure 3.5 on p. 53, both the EJM and the EVR distances are in the wrong place! 3. Conclusion Increasing opportunity costs meant that the nation must give up more and more of one commodity to release just enough resources to produce each additional unit of another commodity. Residents of one country may borrow money from and lend money to residents of other countries. The gains from trade can be broken down into gains from exchange and gains from specialization in production. The common slope of the two curves at the tangency point gives the internal equilibrium-relative commodity price in the nation and reflects the nations comparative advantage. 2023 An Introduction to International Economics, Kenneth A. Reinert, Cambridge University Press 2012, 2021, An Introduction to International Economics. Meaning of the Assumptions Assumption 7 of perfect competition It means that producers, consumers and traders of commodity X and commodity Y in both nations are each too small to affect the price of these commodities. FIGURE 3-6 Trade Based on Differences in Tastes. Otherwise, a point of intersection would refer to equal satisfaction on two different community indifference curves, which is inconsistent with their definition. (Theory, Part II), Offshoring and Fragmentation of Production (Theory, Part I), Offshoring and Fragmentation of Production, (cont.) li yumei economics & management school of southwest university. US real interest MRS is given by the (absolute) slope of the community indifference curve at the point of consumption and declines as the nation moves down the curve. of a currency when its price is low and selling high. For courses in International Economics, International Finance, and International Trade. Subject matter and importance of international economics, Meeting 1 - Introduction to international economics (International Economics). X 100 industries from foreign competition, since consumers will generally purchase Since PAPA, Nation 1 has a comparative advantage in commodity X and Nation 2 in commodity Y. Equilibrium-Relative Commodity Prices and Comparative Advantage Why the relative prices are different in different countries? (Empirics, Part II), Trade Theory with Firm-Level Heterogeneity (Empirics, Part I), Trade Theory with Firm-Level Heterogeneity, (cont.) ",#(7),01444'9=82. The effects of this is also part of international economics. With trade, Nation 1 will produce more of commodity X due to the PA PA in the relative price of commodity X in Nation 1 than Nation 2 while Nation 2 will produce more of commodity Y . them more expensive to consumers

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