第二章TOOLSOFANALYSISFORINTERNATIONALTRADEMODELS.pptVIP

* The case of Constant OC The RP is determined by the slope of the PPF. The demand condition has no effects on the RP. * National Supply and Demand Change RP and see how production and consumption of S change. NS of S: an increasing function of the RP of S. ND of S: a (usually) decreasing function of RP To draw ND for S: Determine the production point at a given RP and find a budget line. Find the equilibrium amount of S consumption. Put the (S, RP) combinations in a graph. The intersection of NS and ND determines equilibrium RP and production of S in autarky. * Figure 2.08 推导 Derivation of national supply and demand curves * Figure 2.09 Alternative derivation of the autarky price ratio * In the above, Autarky relative price: RP1 RP2. S is relatively cheaper in country A. ? Country A has CA(comparative advantage) in S and exports S. Flip（反向） the relative price inequality（不等式）. Then T is relatively cheaper in country B. ? Country B has CA in T and exports T. Trade equilibrium obtains where A’s export of S is exactly the same as B’s import of S. This occurs at RP3. This is the world relative price and called the terms of trade.(usually is called as TOT) Equilibrium in International Trade Country A Country B ND ND NS NS RP1 RP3 RP2 * Q: Discuss how TOT and international trade change in each of the following cases. Increase in demand for S in country B Productivity increase in S production in country A. * * * * * * * (A) In A, both NS and ND shift out to the right. The autarky RP declines in A. The CA in A is deepened. The TOT declines. The quantity of exports is likely to increase. * Ch.2 TOOLS OF ANALYSIS FOR INTERNATIONAL TRADE MODELS * The model of this course using problem Hypotheses假说 [haip?θisi:z] Assumption假设 Empirical study 实证研究 explanation prediction theory modify * The General Equilibrium [,i:kwilibri?m] Model  Assumptions A1. Rational behavior A2. 2 countries (America and Britain) 2 goods (Soybeans大豆 and Textiles纺织品) ? A 2x2 model A