lecture 4 - LECTURE 4: GAINS FROM TRADE Introduction. Gains...

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2010: LECTURE 4 1 LECTURE 4: GAINS FROM TRADE Introduction. Gains from comparative advantage. Mankiw: Chapter 3
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2010: LECTURE 4 2 INTRODUCTION 1. Trade has been going on a long time:
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2010: LECTURE 4 3 2. Many trade blocks formed to encourage trade (also now CAFTA) 3. US belongs to NAFTA, CAFTA, APEC and WTO. Negotiating FTAA.
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2010: LECTURE 4 4 4. Pressure to further expand free trade is weak
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2010: LECTURE 4 5
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2010: LECTURE 4 6
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2010: LECTURE 4 7 5. JOBS: jobs lost ... and jobs gained.
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2010: LECTURE 4 8
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2010: LECTURE 4 9 HISTORY: 1700s Mercantalism Policy of: “Go it alone.” Each European “sphere of influence” prohibited trade with other spheres of influence. By preventing trade, country kept the goods it produces for itself. e.g. North Korea
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2010: LECTURE 4 10 “Go it alone” attitude
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2010: LECTURE 4 11 1776: Adam Smith (1776): “ An inquiry into the nature and causes of the wealth of nations - no farmer would try to “go it alone” - power of free markets 1815 Corn Laws introduced. Import of corn resticted. 1817: David Ricardo (1817): “Principles of political economy and taxation - developed comparative advantage. - trade enables everybody to get more. 1846 Corn Laws repealed
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2010: LECTURE 4 12 WHY IS TRADE “GOOD” - more can be produced - “the pie gets bigger”. - both parties can get more
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This note was uploaded on 10/29/2011 for the course ECON 2010 taught by Professor Mertens,wi during the Spring '07 term at Colorado.

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lecture 4 - LECTURE 4: GAINS FROM TRADE Introduction. Gains...

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