国际经济学 英文版 第一章

克鲁格曼《国际经济学》（国际金融部分）课后习题答案（英文版）第一章CHAPTER 1INTRODUCTIONChapter OrganizationWhat is International Economics About?The Gains from TradeThe Pattern of TradeProtectionismThe Balance of PaymentsExchange-Rate DeterminationInternational Policy CoordinationThe International Capital MarketInternational Economics: Trade and MoneyCHAPTER OVERVIEWThe intent of this chapter is to provide both an overview of the subject matter of international economics and to provide a guide to the organization of the text. It is relatively easy for an instructor to motivate the study of international trade and finance. The front pages of newspapers, the covers of magazines, and the lead reports of television news broadcasts herald the interdependence of the U.S. economy with the rest of the world. This interdependence may also be recognized by students through their purchases of imports of all sorts of goods, their personal observations of the effects of dislocations due to international competition, and their experience through travel abroad.The study of the theory of international economics generates an understanding of many key events that shape our domesticand international environment. In recent history, these events include the causes and consequences of the large current account deficits of the United States; the dramatic appreciation of the dollar during the first half of the 1980s followed by its rapid depreciation in the second half of the 1980s; the Latin American debt crisis of the 1980s and the Mexico crisis in late 1994; and the increased pressures for industry protection against foreign competition broadly voiced in the late 1980s and more vocally espoused in the first half of the 1990s. Most recently, the financial crisis that began in East Asia in 1997 andspread to many countries around the globe and the Economic and Monetary Union in Europe have highlighted the way in which various national economies are linked and how important it is for us to understand these connections. At the same time, protests at global economic meetings have highlighted opposition to globalization. The text material will enable students to understand the economic context in which such events occur.Chapter 1 of the text presents data demonstrating the growth in trade and increasing importance of international economics. This chapter also highlights and briefly discusses seven themes which arise throughout the book. These themes include: 1) the gains from trade;2) the pattern of trade; 3) protectionism; 4), the balance of payments; 5) exchange rate determination; 6) international policy coordination; and 7) the international capital market. Students will recognize that many of the central policy debates occurring today come under the rubric of one of these themes. Indeed, it is often a fruitful heuristic to use current events to illustrate the force of the key themes and arguments which are presentedthroughout the text.。

PART I INSTRUCTOR’S MANUALCHAPTER 1THE INTERNATIONAL ECONOMYCHAPTER OVERVIEWThis chapter introduces students to the international economy. The first part of the chapter emphasizes the high degree of economic interdependence that charac terizes today’s economies. Economic interdependence includes international trade and international finance.The chapter also focuses on the United States as an open economy. Data are provided that show U.S. exports as a percent of gross domestic product and the value of U.S. trade with its major trading partners. The chapter notes that many U.S. firms source a portion of the production of their goods in foreign countries.The chapter concludes by discussing the nature of international competitiveness--for firms, industries, and nations. It is noted that exposure to global competition tends to improve the efficiency of firms. Finally, the chapter introduces the potential effects that international trade has on workers.After completing the chapter, students should be able to:∙Define economic interdependence.∙Discuss the importance of international trade for the U.S. economy.∙Examine the factors that make a company American.∙Discuss the nature of competitiveness and how it applies to firms, industries, and nations.∙Identify the advantages and disadvantages of international trade for workers.BRIEF ANSWERS TO STUDY QUESTIONS1. Interdependence among today's economies reflects the historical evolution of the world's economic andpolitical order. Since World War II, Europe and Japan have reindustrialized. What is more, theformation of the European Community and the Organization of Petroleum Exporting Countries, as well as the rise of multinational corporations, has contributed to closer economic and political linkages.2. Proponents of an open trading system maintain that free trade leads to lower prices, the development ofmore efficient production methods, and a greater range of consumption choices. Free trade permitsresources to move from their lowest productivity to their highest productivity. Critics of an open trading system maintain that import competition may displace domestic firms and workers. It is also argued that during periods of national emergency, it is in the best interests of a nation to protect strategic industries.3. For the United States, growing economic interdependence has resulted in exports and imports increasingas a share of national output. Profits of domestic firms and wages of domestic workers are increasingly being affected by foreign competition. Political and economic events play important roles for theoperation of some sectors of the American economy, such as energy and agriculture.4. The volume of international trade is governed by factors including the level of domestic economic activity(e.g., prosperity versus recession) and restrictions imposed by countries on their imports.5. The chapter describes three fallacies of international trade:a. Trade is a zero sum activityb. Imports reduce employment and act as a drag on the economyc. Tariffs and quotas will save jobs and promote a higher level of employment6. International competitiveness refers to the extent to which the goods of a firm or industry can compete inthe marketplace; this competitiveness depends on the relative prices and qualities of products. No nation can be competitive in, and thus be a net exporter of everything. Because a nation’s stock of resources is limited, the ideal is for these resources to be used in their most productive manner. Nations will benefit from specialization and trade by exporting products having a comparative advantage.7. Researchers at the McKinsey Global Institute have found that global competitiveness is a bit like sports.You get better by playing against folks who are better than you. This means companies are exposed to intense global competition tend to be more productive than those who aren’t.8.International trade benefits most workers, especially those in exporting industries. In addition to providingthem jobs and income, it allows them to shop for consumption goods that are cheapest and of the highest quality. However, workers in import-competing industries often feel threatened from competition ofcheap foreign labor.9.Among the challenges confronting the international trading system are maintaining fair standards for laborand promoting environmental quality.10.The threat of international terrorism tends to slow the degree of globalization and also make it becomecostlier. With terrorism, companies must pay more to insure and provide security for overseas staff and property. Heightened border inspections could slow shipments of cargo, forcing companies to stockmore inventory. Tighter immigration policies could reduce the liberal inflows of skilled and blue-collar laborers that permitted companies to expand while keeping wages in check. Moreover, a greaterpreoccupation with political risk has companies greatly narrowing their horizons when making newinvestments.。

国际经济学克鲁格曼英文版Here is an essay on the topic of "International Economics by Krugman (English Version)" with a word count of over 600 words.The field of international economics has long been dominated by the influential works of renowned economist Paul Krugman. His English-language publications have had a profound impact on the understanding and analysis of global economic dynamics. Krugman's seminal contributions have challenged traditional theories and offered new perspectives that have reshaped the way we conceptualize the complexities of the international economic landscape.At the core of Krugman's work lies a deep understanding of the intricate interplay between trade, investment, and economic growth. His groundbreaking research has shed light on the role of comparative advantage, economies of scale, and imperfect competition in shaping the patterns of global trade and commerce. Krugman's insights have been instrumental in redefining the conventional wisdom regarding the benefits and drawbacks of free trade, highlighting the nuanced and multifaceted nature of international economic integration.One of Krugman's most significant contributions is his analysis of the geography of trade and the emergence of economic agglomerations. By examining the spatial distribution of economic activity, he has challenged the traditional notion of homogeneous and evenly distributed production. Krugman's work has shown how the clustering of industries and the concentration of economic resources can lead to the development of regional hubs and centers of innovation, with profound implications for policymakers and business leaders alike.Moreover, Krugman's work has addressed the complex dynamics of exchange rate fluctuations and their impact on international competitiveness. His models and theories have provided a deeper understanding of the factors that drive exchange rate movements, the consequences of currency misalignments, and the implications for trade balances and global financial stability. This knowledge has been instrumental in informing policy decisions and guiding the efforts of central banks and governments in managing exchange rate regimes.Krugman's contributions extend beyond the realm of trade and finance. His work on the relationship between economic growth and development has shed light on the challenges faced by developing countries in their pursuit of prosperity. By exploring the role oftechnology, human capital, and institutional frameworks, Krugman has offered insights into the drivers of economic development and the policy interventions that can foster inclusive and sustainable growth.Furthermore, Krugman's influence has reached beyond the academic sphere, as his writings have sought to bridge the gap between economic theory and public policy. His accessible and engaging style has made complex economic concepts more comprehensible to a wider audience, empowering policymakers, business leaders, and the general public to engage in informed discussions and debates on the pressing issues of the global economy.In conclusion, the work of Paul Krugman, as articulated in his English-language publications, has been pivotal in shaping the field of international economics. His groundbreaking research, innovative theories, and thought-provoking analyses have challenged conventional wisdom and pushed the boundaries of our understanding of the intricate web of global economic interactions. Krugman's contributions have not only advanced academic discourse but have also informed policy decisions and public discourse, ultimately contributing to a more informed and nuanced understanding of the dynamics of the international economy.。

Chapter 1 Introduction1.1 What Is International Economics About?1) Historians of economic thought often describe ________ written by ________ and published in ________ asthe first real exposition of an economic model.A) "Of the Balance of Trade," David Hume, 1776B) "Wealth of Nations," David Hume, 1758C) "Wealth of Nations," Adam Smith, 1758D) "Wealth of Nations," Adam Smith, 1776E) "Of the Balance of Trade," David Hume, 1758Answer: EQuestion Status: Previous Edition2) From 1959 to 2004,A) the U.S. economy roughly tripled in size.B) U.S. imports roughly tripled in size.C) the share of US Trade in the economy roughly tripled in size.D) U.S. Imports roughly tripled as compared to U.S. exports.E) U.S. exports roughly tripled in size.Answer: CQuestion Status: Previous Edition3) The United States is less dependent on trade than most other countries becauseA) the United States is a relatively large country.B) the United States is a "Superpower."C) the military power of the United States makes it less dependent on anything.D) the United States invests in many other countries.E) many countries invest in the United States.Answer: AQuestion Status: Previous Edition4) Ancient theories of international economics from the 18th and 19th Centuries areA) not relevant to current policy analysis.B) are only of moderate relevance in today's modern international economy.C) are highly relevant in today's modern international economy.D) are the only theories that actually relevant to modern international economy.E) are not well understood by modern mathematically oriented theorists.Answer: CQuestion Status: Previous Edition5) An important insight of international trade theory is that when countries exchange goods and services onewith the other itA) is always beneficial to both countries.B) is usually beneficial to both countries.C) is typically beneficial only to the low wage trade partner country.D) is typically harmful to the technologically lagging country.E) tends to create unemployment in both countries.Answer: BQuestion Status: Previous EditionB) trade is likely to be harmful to the country with the high wages.C) trade is likely to be harmful to the country with the low wages.D) trade is likely to be harmful to neither country.E) trade is likely to have no effect on either country.Answer: DQuestion Status: Previous Edition7) Benefits of international trade are limited toA) tangible goods.B) intangible goods.C) all goods but not services.D) services.E) None of the above.Answer: EQuestion Status: Previous Edition8) Which of the following does not belong?A) NAFTAB) Uruguay RoundC) World Trade OrganizationD) None Tariff BarriersE) None of the above.Answer: DQuestion Status: Previous Edition9) International economics does not use the same fundamental methods of analysis as other branches ofeconomics, becauseA) the level of complexity of international issues is unique.B) the interactions associated with international economic relations is highly mathematical.C) international economics takes a different perspective on economic issues.D) international economic policy requires cooperation with other countries.E) None of the above.Answer: EQuestion Status: New10) Because the Constitution forbids restraints on interstate trade,A) the U.S. may not impose tariffs on imports from NAFTA countries.B) the U.S. may not affect the international value of the $ U.S.C) the U.S. may not put restraints on foreign investments in California if it involves a financialintermediary in New York State.D) the U.S. may not impose export duties.E) None of the aboveAnswer: EQuestion Status: NewB) the balance of paymentsC) exchange rate determinationD) Bilateral trade relations with ChinaE) None of the aboveAnswer: DQuestion Status: New12) "Trade is generally harmful if there are large disparities between countries in wages."A) This is generally true.B) This is generally false.C) Trade theory has nothing to say about this issue.D) This is true if the trade partner ignores child labor laws.E) This is true if the trade partner uses prison labor.Answer: BQuestion Status: New13) Who sells what to whomA) has been a major preoccupation of international economics.B) is not a valid concern of international economics.C) is not considered important for government foreign trade policy since such decisions are made in theprivate competitive market.D) is determined by political rather than economic factors.E) None of the aboveAnswer: AQuestion Status: New14) The insight that patterns of trade are primarily determined by international differences in labor productivitywas first proposed byA) Adam Smith.B) David Hume.C) David Ricardo.D) Eli Heckscher.E) Lerner and Samuelson.Answer: CQuestion Status: New15) Since the mid 1940s, the United States, has pursued a broad policy ofA) strengthening "Fortress America" protectionism.B) removing barriers to international trade.C) isolating Iran and other axes of evil.D) protecting the U.S. from the economic impact of oil producers.E) None of the above.Answer: BQuestion Status: NewB) the U.S. economy cannot grow when the balance of payments is in deficit.C) the U.S. has run huge trade deficits in every year since 1982.D) the U.S. never experienced a surplus in its balance of payments.E) None of the above.Answer: CQuestion Status: New17) The euro, a common currency for most of the nations of Western Europe, was introducedA) before 1900.B) before 1990.C) before 2000.D) in order to snub the pride of the U.S.E) None of the above.Answer: CQuestion Status: New18) During the first three years of its existence, the euroA) depreciated against the $U.S.B) maintained a strict parity with the $U.S.C) strengthened against the $U.S.D) proved to be an impossible dream.E) None of the above.Answer: AQuestion Status: New19) The study of exchange rate determination is a relatively new part of international economics, since,A) for much of the past century, exchange rates were fixed by government action.B) the calculations required for this were not possible before modern computers became available.C) economic theory developed by David Hume demonstrated that real exchange rates remain fixed overtime.D) dynamic overshooting asset pricing models are a recent theoretical development.E) None of the aboveAnswer: AQuestion Status: New20) A fundamental problem in international economics is how to produceA) a perfect degree of monetary harmony.B) an acceptable degree of harmony among the international tradepolicies of different countries.C) a world government that can harmonize trade and monetary policiesD) a counter-cyclical monetary policy so that all countries will not be adversely affected by a financialcrisis in one country.E) None of the above.Answer: BQuestion Status: NewB) by the International Monetary Fund.C) by the World.D) by an international treaty known as the General Agreement on Tariffs and Trade (GATT).E) None of the above.Answer: DQuestion Status: New22) The international capital market isA) the place where you can rent earth moving equipment anywhere in the world.B) a set of arrangements by which individuals and firms exchange money now for promises to pay in thefuture.C) the arrangement where banks build up their capital by borrowing from the Central Bank.D) the place where emerging economies accept capital invested by banks.E) None of the above.Answer: BQuestion Status: New23) International capital markets experience a kind of risk not faced in domestic capital markets, namelyA) "economic meltdown" risk.B) Flood and hurricane crisis risk.C) the risk of unexpected downgrading of assets by Standard and Poor.D) exchange rate risk.E) None of the above.Answer: DQuestion Status: New24) Since 1994, trade rules have been enforced byA) the WTO.B) the G10.C) the GATT.D) The U.S. Congress.E) None of the above.Answer: AQuestion Status: New25) In 1998 an economic and financial crisis in South Korea caused it to experienceA) a surplus in their balance of payments.B) a deficit in their balance of payments.C) a balanced balance of payments.D) an unbalanced balance of payments.E) None of the above.Answer: AQuestion Status: Newtrade meeting in Seattle ofA) the OECD.B) NAFTA.C) WTO.D) GATT.E) None of the above.Answer: CQuestion Status: New27) International Economists cannot discuss the effects of international trade or recommend changes ingovernment policies toward trade with any confidence unless they knowA) their theory is the best available.B) their theory is internally consistent.C) their theory passes the "reasonable person" legal criteria.D) their theory is good enough to explain the international trade that is actually observed.E) None of the above.Answer: DQuestion Status: New28) Trade theorists have proven that the gains from tradeA) must raise the economic welfare of every country engaged in trade.B) must raise the economic welfare of everyone in every country engaged in trade.C) must harm owners of "specific" factors of production.D) will always help "winners" by an amount exceeding the losses of "losers."E) None of the above.Answer: EQuestion Status: New1.2 International Economics: Trade and Money1) Cost-benefit analysis of international tradeA) is basically useless.B) is empirically intractable.C) focuses attention primarily on conflicts of interest within countries.D) focuses attention on conflicts of interests between countries.E) None of the above.Answer: CQuestion Status: Previous Edition2) An improvement in a country's balance of payments means a decrease in its balance of payments deficit, oran increase in its surplus. In fact we know that a surplus in a balance of paymentsA) is good.B) is usually good.C) is probably good.D) may be considered bad.E) is always bad.Answer: DQuestion Status: Previous EditionA) an international treaty.B) an international U.N. agency.C) an international IMF agency.D) a U.S. government agency.E) a collection of tariffs.Answer: AQuestion Status: Previous Edition4) The international debt crisis of early 1982 was precipitated when ________ could not pay its internationaldebts.A) RussiaB) MexicoC) BrazilD) MalaysiaE) ChinaAnswer: BQuestion Status: Previous Edition5) International economics can be divided into two broad sub-fieldsA) macro and micro.B) developed and less developed.C) monetary and barter.D) international trade and international money.E) static and dynamic.Answer: DQuestion Status: Previous Edition6) International monetary analysis focuses onA) the real side of the international economy.B) the international trade side of the international economy.C) the international investment side of the international economy.D) the issues of international cooperation between Central Banks.E) None of the above.Answer: EQuestion Status: New7) The distinction between international trade and international money is not useful sinceA) real developments in the trade accounts have monetary implications.B) the balance of payments includes both real and financial implications.C) developments caused by purely monetary changes have real effects.D) trade models focus on real, or barter relationships.E) None of the above.Answer: EQuestion Status: NewWhat are the logical underpinnings of this argument?Answer: Yes. They do not have sufficient resources to satisfy consumption needs; and also do not have a sufficiently large market to enable their industries to avail themselves of scale economy possibilities.Another answer would rely on a location argument. Assume that the "natural" market for any givenplant is a circle with a radius of n miles with the plant at its center. Assuming that the productionplants are located randomly throughout the country, then the probability that the typical circularmarket will encompass some foreign country is greater the smaller is the country.Question Status: Previous Edition9) It is argued that if a rich high wage country such as the United States were to expand trade with a relativelypoor and low wage country such as Mexico, then U.S. industry would migrate south, and U.S. wages would fall to the level of Mexico's. What do you think about this argument?Answer: The student may think anything. The purpose of the question is to set up a discussion, which will lead to the models in the following chapters.Question Status: Previous Edition10) Some patterns of international trade are easier to explain than others. Give several examples and explain.Answer: Historical circumstance can explain some patterns such as the relatively large trade flows from West Africa to France. The relatively sparse trade between countries within South America seems curious.Question Status: Previous Edition11) International trade tends to prove that international trade is beneficial to all trading countries. However,casual observation notes that official obstruction of international trade flows is widespread. How might you reconcile these two facts?Answer: This question is meant to allow students to offer preliminary discussions of issues, which will be explored in depth later in the book.Question Status: Previous Edition12) It is argued that small countries tend have more open economies than large ones. Is this empirically verified?What are the logical underpinnings of this argument?Answer: Yes. They do not have sufficient resources to satisfy consumption needs; and also do not have a sufficiently large market to enable their industries to avail themselves of scale economy possibilities.Another answer would rely on a location argument. Assume that the "natural" market for any givenplant is a circle with a radius of n miles with the plant at its center. Assuming that the productionplants are located randomly throughout the country, then the probability that the typical circularmarket will encompass some foreign country is greater the smaller is the country.Question Status: Previous Edition13) It is argued that if a rich high wage country such as the United States were to expand trade with a relativelypoor and low wage country such as Mexico, then U.S. industry would migrate south, and U.S. wages would fall to the level of Mexico's. What do you think about this argument?Answer: The student may think anything. The purpose of the question is to set up a discussion, which will lead to the models in the following chapters.Question Status: Previous Edition14) Some patterns of international trade are easier to explain than others. Give several examples and explain.Answer: Historical circumstance can explain some patterns such as the relatively large trade flows from West Africa to France. The relatively sparse trade between countries within South America seems curious.Question Status: Previous Editioncasual observation notes that official obstruction of international trade flows is widespread. How might you reconcile these two facts?Answer: This question is meant to allow students to offer preliminary discussions of issues, which will be explored in depth later in the book.Question Status: Previous Edition16) International Trade theory is one of the oldest areas of applied economic policy analysis. It is also an area forwhich data was relatively widely available very early on. Why do you suppose this is the case?Answer: In ancient times, public finance was not well developed. Most of the population was not producing and consuming within well-developed market economies, so that income and sales taxes were notefficient. One of the most convenient ways for governments to obtain resources was to set up customposts at borders and tax. Hence international trade was of great policy interest to princes and kings, aswas precise data of their main tax base.Question Status: Previous Edition17) The figure above is the Production Possibility Frontier (PPF) of Baccalia, where only two products areproduced, clothing and wine. In fact Baccalia is producing on its PPF at point A. By and large the people of Baccalia are content, as both their external and internal needs for warmth are satisfied in the mosteconomically efficient manner possible, given their available productive resources (and known technology).How much wine is being produced? How much cloth? If a person in this country wanted to purchase a liter of wine, what would be the price he or she would have to pay?Judging from what you learned in the previous paragraph, can you indicate at which point (if at all) the Community Indifference Curve is tangent to the Production Possibility Frontier? Explain your reasoning.Answer: 6 million liters of wine are being produced.3 million square yards of cloth are being produced.The price of 1 liter of wine is one half of a square yard of cloth.The tangency is at point A. We know this because otherwise the country would not be producing atthe point of maximum economic efficiency.Question Status: Previous Edition18) One day, Baccalia joined the WTO and joined the Global Village. They discovered that in the LWE (LondonWine Exchange), 1 liter of wine is worth 1 square yard of cloth. What is the logical production point they should strive for? (See figure.)Answer: 10 million liters of wine.Question Status: Previous Edition19) Baccalia wishes to enjoy to the fullest from the gains from trade, but is not willing to give up imbibing evenone drop of wine from the 6 million liters they consumed in their original autarkic state. If their newconsumption point is a point we shall designate as point b, describe where this point would be found. (See figure.)Answer: Vertically above point aQuestion Status: Previous Edition20) Where is the Community Indifference Curve family of curves tangent to their new Consumption PossibilityFrontier?Answer: At point b.Question Status: Previous Edition21) How can you prove that Baccalia has in fact gained from the availability of trade, and that their newsituation is superior to the pre-trade situation (with which they were quite content)?Answer: The country was consuming at point a before trade. It is now consuming at point b with trade. Point b represents a superior welfare combination of goods as compared to point a, since at b the country hasmore of each of the goods.Question Status: Previous Edition。

保罗克鲁格曼国际经济学英⽂课件1-7章Preface§1. Some distinctive features of International Economics: Theory and Policy.This book emphasizes several of the newer topics that previous authors failed to treat in a systematic way:·Asset market approach to exchange rate determination.·Increasing returns and market structure.·Politics and theory of trade policy.·International macroeconomic policy coordination·The word capital market and developing countries.·International factor movements.§2. Learning features:·Case studies·Special boxes·Captioned diagrams·Summary and key terms·Problems·Further reading§3.Reference books:·[美]保罗?克鲁格曼，茅瑞斯?奥伯斯法尔德，《国际经济学》，第6版，中译本，中国⼈民⼤学出版社，2007.·李坤望主编，《国际经济学》，第⼆版，⾼等教育出版社，2005.·Dominick Salvatore, International Economics, Prentice Hall International，第9版，清华⼤学出版社，英⽂版，2008. Chapter 1Introduction·Nations are more closely linked through trade in goods and services, through flows of money, and through investment than ever before.§1. What is international economics about?Seven themes recur throughout the study of international economics:·The gains from trade(National welfare and income distribution)·The pattern of trade·Protectionism·The balance of payments·Exchange rate determination·International capital market§2. International economics: trade and money·Part I (chapters 2 through 7) :international trade theory·Part II (chapters 8 through 11) : international trade policy ·Part III (chapters 12 through 17) : international monetary theory ·Part IV (chapters 18 through 22) : international monetary policyChapter 2 World Trade: An Overview§1 Who Trades with Whom?1. Size Matters: The Gravity ModelThe size of an economy is directly related to the volume of imports and exports.Larger economies produce more goods and services, so they have more to sell in the export market. Larger economies generate more income from the goods and services sold, so people are able to buy more imports.3 of the top 10 trading partners with the US in 2003 were also the 3 largest European economies: Germany, UK and France. These countries have the largest gross domestic product (GDP) in Europe.Cultural affinity: if two countries have cultural ties, it is likely that they also have strong economic ties.Geography: ocean harbors and a lack of mountain barriers make transportation and tradeeasier.2. Distance Matters: The Gravity ModelDistance between markets influences transportation costs and therefore the cost of imports and exports. Distance may also influence personal contact and communication, which may influence trade.Estimates of the effect of distance from the gravity model predict that a 1% increase in the distance between countries isassociated with a decrease in the volume of trade of 0.7% to 1%.Borders: crossing borders involves formalities that take time and perhaps monetary costs like tariffs. These implicit and explicit costs reduce trade. The existence of borders may also indicate the existence of different languages or different currencies, either of which may impede trade more.3.The gravity modelThe gravity model is:a b c ij i j ijT A Y Y D =?? where a, b, and c are allowed to differ from 1.§2. The Changing Composition of Trade1. Has the World Become “Smaller ”?There were two waves of globalization.1840–1914: economies relied on steam power, railroads, telegraph, telephones. Globalization was interrupted and reversed by wars and depression.1945–present: economies rely on telephones, airplanes, computers, internet, fiber optics,…2. Changing Composition of TradeToday, most of the volume of trade is in manufactured products such as automobiles, computers, clothing and machinery. Services such as shipping, insurance, legal fees and spending by tourists account for 20% of the volume of trade.Mineral products (e.g., petroleum, coal, copper) and agricultural products are a relatively small part of trade.Multinational Corporations and OutsourcingBefore 1945, multinational corporations played a small role world trade.But today about one third of all US exports and 42% of all US imports are sales from one division of a multinational corporation to another.Chapter 3Labor Productivity and Comparative Advantage:The Ricardian Model*Countries engage in international trade for two basic reasons:·Comparative advantage: countries are different in technology (chapter 3) or resource (chapter 4).·Economics of scale (chapter 6).*All motives are at work in the real world but only one motive is present in each trade model.§1. The concept of comparative advantage1. Opportunity cost : The opportunity cost of roses in terms of computers is the number of computers that could have been produced with the resources used to produce a given number of roses.Table 3-1 Hypothetical Changes in Production Million Roses Thousand Computers United States－10 ＋100 South America＋10 －30 Total 0 ＋702. Comparative advantage : A country has a comparative advantage in producing a good if the opportunity cost of producing that good in terms of other goods is lower in that country than it is in other countries.·Denoted by opportunity cost.·A relative concept : relative labor productivity or relative abundance.3. The pattern of trade: Trade between two countries can benefit both countries if each country exports the goods in which it has a comparative advantage.§2. A one-factor economy1.production possibilities: LC C LW W a Q a Q L +≤Figure 3-1 Home’s Production Possibility Frontier2. Relative price and supply·Labor will move to the sector which pays higher wage.·If C W LC LW P P a a >(C LC W LW P a P a >, wage in the cheese sector is higher ), the economy will specialize in the production of cheese.·In a closed economy, C W LC LW P P a a =.·If each country has absolute advantage in one good respectively, will there exist comparative advantage?§3. Trade in a one-factor world·Model : 2×1×2·Assume: **LC LW LC LW a a a a <Home has a comparative advantage in cheese.Home ’s relative productivity in cheese is higher.Home ’s pretrade relative price of cheese is lower than foreign.·The condition under which home has the comparative advantage involves all four unit labor requirement, not just two.1. Determining the relative price after trade·Relative price is more important than absolute price, when people make decisions on production and consumption.·General equilibrium analysis: RS equals RD . (World general equilibrium)·RS : a “step ” with flat sections linked by a vertical section. **(/)(/)LC LW L a L aFigure 3-3 World Relative Supply and Demand·RD : subsititution effects·Relative price after trade: between the two countries ’ pretrade price.(How will the size of the trading countries affect the relative price after trade? Which country ’s living condition improves more? Is it possible that a country produce both goods?)2. The gains from tradeThe mutual gain can be demonstrated in two alternative ways.·To think of trade as an indirect method of production :(1/)()1/LC C W LW a P P a > or C W LC LW P P a a >·To examine how trade affects each country ’s possibilities of consumption.Figure 3-4 Trade Expands Consumption Possibilities(How will the terms of trade change in the long-term? Are there income distribution effects within countries? )3. A numerical example:·Two crucial points :When two countries specialize in producing the goods in which they have a comparative advantage, both countries gain from trade.Comparative advantage must not be confused with absolute advantage; it is comparative, not absolute, advantage that determines who will and should produce a good.Table 3-2 Unit Labor Requirements Cheese WineHome 1LC a = hour per pound 2LW a = hours per gallonForeign*6LC a = hours per pound *3LW a = hours per gallon absolute advantage; relative price; specialization; the gains from trade.4. Relative wages·It is precisely because the relative wage is between the relative productivities that each country ends up with a cost advantage in one good.***LC LC LW LW a a w w a a >> **LC LC wa w a <；**LW LW wa w a >·Relative wages depend on relative productivity and relative demand on goods.Special box: Do wages reflect productivity?。

Course Syllabus of International Economics For undergraduate student who major in economics(Class hours:72)Course Description:This course is designed for undergraduate student who have had a course in economic principles, but do not have the opportunity to study international trade and money on a regular basis.Course Objective:·To grasp and retain the underlying theory of international trade and money.·To show the intellectual advances in this dynamic field.·To provide an up-to date and understandable analytical framework for illuminating trade policy, past and current.·To review principles of economics as necessary.Course Contents and Schedule:Textbook and Reference Books:Textbook·Paul R.Krugman, Maurice Obstfeld. International Economics , 6e, 清华大学出版社，2004.Reference Books·[美]保罗•克鲁格曼，茅瑞斯•奥伯斯法尔德，《国际经济学》，第五版，中译本，中国人民大学出版社，2003.·李坤望主编，《国际经济学》，第二版，高等教育出版社，2005. ·姜波克、杨长江编著，《国际金融学》，第二版，高等教育出版社，2004.·Dominick Salvatore. International Economics, Prentic Hall International , 8e, 清华大学出版社，2006.PREFACE§1.The place of this book in the economics curriculum§2.Some Distinctive Features of International Economics: Theory and PolicyThis book emphasized several of the newer topics that previous authors failed to treat in a systematic way :·Asset market approach to exchange rate determination. ·Increasing returns and market structure.·Politics and theory of trade policy.·International macroeconomic policy coordination·The world capital market and developing countries. ·International factor movements.§3. Learning Features·Case studies·Special boxes·Captioned diagrams·Summary and key terms·Problems·Further readingCHAPTER 1 Introduction§1. What Is International Economics About?Seven themes recur throughout the study of international economics :·The gains from trade(national welfare and income distribution)·The pattern of trade·Protectionism·The balance of payments·Exchange rate determination·International policy coordination·International capital market§2. International Economics: Trade and Money·Part I (chapters 2 through 7) :International trade theory·Part II (chapters 8 through 11) : International trade policy·Part III (chapters 12 through 17) : International monetary theory ·Part IV (chapters 18 through 22) : International monetary policy。