International Economics
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Dominick-Salvatore-International-Economics
icy Brief , Peterson Institute, January 2008.
■ EEAG, “The Effects of Globalization on Western European Jobs: A Curse or a Blessing?” in EEAG Report of the Euro- pean Economy 2008 (Munich: EEAG, 2008), pp. 71–104. Salvatore c03.tex V2 - 10/26/2012 1:00 P.M. Page 84 84 The Standard Theory of International Trade ■ D. Salvatore. Ed., “Is It Time to Change Trade Policies?” Special Issue of the Journal of Policy Modeling, July/August 2009 with papers by J. Bhagwati, R. Baldwin, A. Deardorf and R. Stern, R. Gomory and W. Baumol, A. Panagaryia, S. Edwards, J. Dean, and this author. ■ R. C. Feenstra, Offshoring in the Global Economy (Cam- bridge, Mass.: MIT Press, 2010). For a review of, or introduction to, production theory, as well as for the derivation of the Edgeworth box diagram and production frontiers, see: ■ D. Salvatore, Microeconomics: Theory and Applications, 4th ed. (New York: Oxford University, 2009), chs. 7 and 17 (sects. 17.2 and 17.3). ■ D. Salvatore, Microeconomics: Theory, 4th ed. (New York: McGraw-Hill, 2006), chs. 6 and 14. I N T E R N e t Information and data on the comparative advantage of nations, specialization and export concentration, and dein- dustrialization are published by the World Trade Organi- zation (WTO), the United Nations, the International Mon- etary Fund, and the World Bank and can be found at: http://www.wto.org http://unstats.un.org/unsd http://www.imf.org http://worldbank.org For deindustrialization, see the work of G. Hacche and F. Ramaswamy at: http://www.imf.org/external/pubs/ft/issues10 For U.S. trade statistics by region or country see the International Trade Administration, Office of Trade and Economic Analysis of the U.S. Department of Commerce at: http://www.ita.doc.gov/td/industry/otea For hourly compensation of U.S. workers and workers in many advanced countries, see the Bureau of Labor Statis- tics of the U.S. Department of Labor at: http://www.bls.gov/data/home.htm For skepticism of free trade, see: http://www.citizen.org/trade Salvatore c04.tex V2 - 10/26/2012 12:58 A.M. Page 85 Demand and Supply, Offer Curves, and the Terms of Trade chapter L E A R N I N G G OA L S : After reading this chapter, you should be able to: • Show how the equilibrium price at which trade takes place is determined by demand and supply • Show how the equilibrium price at which trade takes place is determined with offer curves • Explain the meaning of the terms of trade and how they changed over time for the United States and other countries 4.1 Introduction We saw in Chapter 3 that a difference in relative commodity prices between two nations in isolation is a reflection of their comparative advantage and forms the basis for mutually beneficial trade. The equilibrium-relative commodity price at which trade takes place was then found by trial and error at the level at which trade was balanced. In this chapter, we present a more rigorous theoretical way of determining the equilibrium-relative commodity price with trade. We will first do this with partial equilibrium analysis (i.e., by utilizing demand and supply curves) and then by the more complex general equilibrium analysis, which makes use of offer curves. Section 4.2 shows how the equilibrium-relative commodity price with trade is determined with demand and supply curves (i.e., with partial equilibrium analy- sis). We then go on to general equilibrium analysis and derive the offer curves of Nation 1 and Nation 2 in Section 4.3. In Section 4.4, we examine how the interaction of the offer curves of the two nations defines the equilibrium-relative commodity price with trade. In Section 4.5, we look at the relationship between general and partial equilibrium analyses. Finally, Section 4.6 examines the meaning, measurement, and importance of the terms of trade. The appendix to this chapter presents the formal derivation of offer curves and examines the case of multiple and unstable equilibria. 85 Salvatore c04.tex V2 - 10/26/2012 12:58 A.M. Page 86 86 Demand and Supply, Offer Curves, and the Terms of Trade 4.2 The Equilibrium-Relative Commodity Price with Trade—Partial Equilibrium Analysis Figure 4.1 shows how the equilibrium-relative commodity price with trade is determined by partial equilibrium analysis. Curves D Download 7.1 Mb. Do'stlaringiz bilan baham: |
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