Econ Notes

Econ Notes - 1-22-08Reccomended readingsRead chapter 2when...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1-22-08Reccomended readingsRead chapter 2when you get booksGravity modelInflucen of econs size on tradeDistance and other factors that influence tradeBorders and trade agreementsGobalization then and nowChanging composition of tradeMultinational coroporations and outsourcingLargest partners of usCanada, mexico, china, japan and germanyProximity and gdp(economic size)Economc size= population x income per person=total gdpCanada largest trading partner $400 billion3/10 of top trading partners were 3largest euro economies germ, uk and fransizedirectly related to volume of imports and exportslarge produce more, so have more to selllarge gernerates more income, thus can buy more importsbbbbbbesidesBesides sizeDistance btwn markets Transportation costscosts of imps and exps.Cultural affinityGeographyNo mountains, existence of harbots=easier trade, less expensiveMultinational corpImp and exp gods bwn divisions of companyBordersTime and tarrifs=costsImplicet and explicit costs reduce tradeExistence of borders= diff currency, diff langmay impede tradeGravity modelTij= A x Yix Yj/DijTij= value of trade between country I and country JA= constantYi = Gdp of conry iYj=gdp pd country jDij= distance between countr I and contry jDistance of effect1% increase in distance.7%-1% decrease in tradeborderstrade agreements, intended to reduce the formalities and tariffs needed to cross borders and therefore to ncrease tradegravity model can assess the effect of trade agreements on tradeus trades most with mexico and Canada bc of nafta and proximitymuch more than gdp would predictbuttttt borders still reduce trade, even if sharedhas world become smaller?Modern transport and communication has lessened ngative effects of distanceWars chance trade oatters smuch more than innovations in transp and communiPOLITICALTwo big waves of globalization1840-1914uppped by techioogy eegraphy, tailroadsstopped by wars and depression1945-present- airplanes, internertm, computersdiffs between periodsThursday!1-24-08developed and developing countries have changed composition of trade in past 100 yearstoday 1/3 of exportd and 42% of us imports come from one division of multinational coop to anotheroutsourcingwhen firm moves businsess opps out of domestic countryCOMPARITIVE ADVANTAGE AND TRADEOpportunity costs!Basic ricardian model..one facor or production (labor)Gains from tradeWages and tradeMisconceptionsWhy tradeAgents are different from another (comparitive advantage theory)Agents want to achiever economies of scale in productionRicardian model of c.a....
View Full Document

Page1 / 7

Econ Notes - 1-22-08Reccomended readingsRead chapter 2when...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online