InternationalEconomics介绍.pptVIP

Chapter 5 The Standard Trade Model Main Contents A Standard Model of a Trading Economy Economic Growth: A Shift of the RS Curve International Transfer of Income:  Shifting the RD Curve Tariffs and Export Subsidies:  Simultaneous Shifts in RS and RD The Specific Factors Model The H-O Model Ⅰ. A Standard Model of a Trading Economy ⅰ.The PPF and RS PC/PF ⅱ. Relative Prices and RD PC/PF ⅲ. Determination of Relative Prices (terms of trade) ⅳ. The Welfare Effect of Changes in the Terms of Trade Ⅱ. Economic Growth: A Shift of the RS Curve ⅰ. Biased Growth Definition: Biased growth takes place when the PPF shifts out more in one direction than in the other. ⅱ. RS and the terms of trade Ⅲ. International Transfer of Income:  Shifting the RD Curve ⅰ. MPSC(H)＞MPSC(F), Home’s transfer payment to Foreign reduces demand for cloth and increases demand for food. ⅱ. MPSC(H) MPSC(F), Home’s transfer payment to Foreign reduces demand for food and increases demand for cloth. Conclusion: In general, a transfer worsens the donor’s terms of trade if the the donor has a higher marginal propensity to spend on its export good than the recipient. If the donor has a lower marginal propensity to spend on its export good than the recipient, its terms of trade will actually improve. Ⅳ. Tariffs and Export Subsidies:  Simultaneous Shifts in RS and RD ⅰ. The Effects of Import Tariffs Result: Export subsidies will worsen Home’s welfare. 20% on food (PC/PF)internal (PF/PC)internal The relative supply of cloth will decrease. The relative demand for cloth will increase. Graph as the following. (PC/PF)external (PF/PC)external ＞ SF SC 2 1 PC/PF (PC/PF)1 (PC/PF)2 RS2 RS1 RD2 RD1 (QC+Q*C)/(QF+Q*F) Result: Import tariffs will improve Home’s terms of trade. How about a small country, such as Luxemburg? ⅱ. The Effects of Export Subsidies Home offers 20% subsidy on cloth Domestic PC/PF will