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28 Οκτ 2013 (πριν από 3 χρόνια και 10 μήνες)

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International Economics

Professor Ivar Bredesen

Room PI
-
536

ivar.bredesen@hioa.no

2

of 69

International Economics


Specific subjects


International trade theory. The basis for trade and the
gains from trade


International trade policy. The reasons for and the
effects of trade restrictions


Balance of payments. A nations total receipts and total
payments to the rest of the world


Foreign exchange markets. Exchange of one national
currency for another


Open economy macroeconomics. Stabilisation policies
in the open economy


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International Economics


Basically
,
the

course

is
divided

into

two

parts


International trade
theory

and trade policy


International
Macroeconomics


It
will

be
assumed

that

students master
basic

microeconomics

and
macroeconomics



We

will

mostly

explore

theory

using

graphical

analysis

with

little

use

of

mathematics


5
-
hour
closed

book
exam

in
December

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International Economics





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International Economics


Required reading


Feenstra

and Taylor: International
Economics
, 2nd
ed. 2012


Chapter 1


6, 8, 9, 19, 21


Baldwin
/
Wyplosz
,
ch
. 15


A study guide by Stephen
Yeaple

is also
available for the
Feenstra
/Taylor book


Textbook web:

http://bcs.worthpublishers.com/feenstrataylor
2_intlecon/#t_667533____

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of 69

Recommended reading



Excellent

non
technical

book
written

by
one

of

the

leading

trade
economists

in
the

world
,
Elhanan

Helpman


Recommended

as a
supplement,
but

cannot

replace

textbook

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International Economics


International Economics
-

economic
interdependence among nations


Globalisation


Flow of goods and services across borders


Movement of people and firms


Spread of culture and ideas between countries


Tight integration of financial markets


Kofi Annan, former secretary general of the
United Nations (2000)


The main losers in today`s very unequal world are not
those who are too much exposed to globalization. They
are the ones who have been left out.

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Trade in a Global Economy


Why do countries trade?


They can get products from abroad cheaper or of
higher
-
quality than those obtained domestically.


The fact that Germany was the largest exporter of goods in
2005 shows its technology for producing high
-
quality
manufactured goods.


China produces goods more cheaply than most industrialized
countries.


In the first part of the course, we will examine several models
explaining international trade


How do we measure the volume of trade?


Bilateral trade flows can be hard to interpret


Another way to measure trade is by looking at its ratio to GDP
.

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of 69

TABLE

1
-
2

Trade/GDP Ratio in 2008
Countries with the highest ratios of trade to GDP
tend to be small in economic size. Countries with the lowest ratios of trade to
GDP tend to be very large in economic size.

Trade Compared to GDP

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This diagram shows total
trade in merchandise goods
and services for each country
divided by GDP.

There was a considerable
increase in the ratio of trade
to GDP between 1890 and
1913. This trend was ended
by World War I and the Great
Depression

Most of the industrial
countries shown did not reach
the level of trade prevailing in
1913 until the 1970s.

FIGURE

1
-
3

Trade in Goods and Services Relative to GDP

Trade Compared to GDP

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FIGURE

1
-
5

Change in the Value of
Trade, 2007

2009
(percent)

As a result of a
worldwide financial
crisis and economic
recession, the value
of trade plummeted
between early 2008
and early 2009.

Trade
and the financial crisis

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International Trade


The First “Golden Age” of Trade was from 1890
-
1913, and the second one in the period after
WW2


Trade had a setback in the interwar period, partly due to
trade barriers. This decline in the world economy lead the
Allied countries to meet after WWII to develop policies to
keep tariffs low. General Agreement on Tariffs and Trade
(GATT) which became the World Trade Organization
(WTO)


Trade barriers

refer to all factors that influence the
amount of goods and services shipped across
international borders.

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Barriers to Trade

Figure 1.4
Average Worldwide Tariffs, 1860

2000