1 Intl Econ Notes

1 Intl Econ Notes - I n tl Econ Notes 3/30/09 T wo...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Int’l Econ Notes 3/30/09 Two questions for quarter: o Why do countries trade? o What is the impact of trade policy on national welfare? What’s the optimal trade policy for a country? o Why does capital flow from one country to another? Short term financing Investors looking for a return on their investment Some countries will want to invest their savings Approach is policy based and theory based o We’ll use dif models of trade for different things o General theories are not always useful because they are complex b/c want to cover all the different possibilities o Empirical application: try to predict the past w/ data Approximately one chapter per class, optional review sessions Be ready for cold calls Hanson will hold review sessions Hanson’s final exam is the midterm of the course Syllabus is cumulative Why do countries trade? o Trade protectionism is big temptation during times of crisis o Trade barriers were put in place during Great Depression during 1930s o We’ll focus on comparative advantage the most o Comparative advantage Differences between countries in their technologies or in their resources (capital, labor, land) create gains from trade Ricardian model (dif in tech), Heckscher-Ohlin model (difs in resource supplies) Technology: how you transform inputs into outputs; not quality/quantity Differences in know-how will create difs in outputs Production function: Y=F(k sub one * L) L is labor, k is capital, F is production function, Y is output
Background image of page 1

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

View Full DocumentRight Arrow Icon
Dif countries have dif production functions (ev1 is good at dif things) Heckscher-Ohlin model: dif countries have dif inputs (resources based) o Increasing returns to scale (Krugman) During 1970s, developing economies were more closed so didn’t benefit very much from trade Downward sloping avg cost curves make it advantageous for countries to specialize in producing particular goods (eg, the US
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/27/2009 for the course IRPS IRCO 403 taught by Professor Gordonhansonandtakeohoshi during the Spring '09 term at UCSD.

Page1 / 6

1 Intl Econ Notes - I n tl Econ Notes 3/30/09 T wo...

This preview shows document pages 1 - 3. Sign up to view the full document.

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