国际经济学双语第1章课件

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1、Classical Theories of International TradeInternational EconomicsChapter 1Chapter 1 Classical Theories of International Traden1.1 Mercantilismn1.2 Trade Based on Absolute Advantage:Adam Smithn1.3 Trade Based on Comparative Advantage:David Ricardon1.4 Comparative Advantage and Opportunity Costn1.5 Com

2、parative Advantage with More Than Two Commodities and Countriesn1.6 Theory of Reciprocal Demandn1.7 Offer Curve and Terms of Trade1.1 MercantilismnThe mercantilists advocated government regulation of trade to promote a favorable trade balance.nIf a country could achieve a favorable trade balance,it

3、would receive payments from the rest of the world in the form of gold and silver.Such revenues would contribute to an increase in spending and thus a rise in domestic output and employment.nCriticsuPossible only for short termuAssuming static world economy Chapter 1 Classical Theories of Internation

4、al Traden1.1 Mercantilismn1.2 Trade Based on Absolute Advantage:Adam Smithn1.3 Trade Based on Comparative Advantage:David Ricardon1.4 Comparative Advantage and Opportunity Costn1.5 Comparative Advantage with More Than Two Commodities and Countriesn1.6 Theory of Reciprocal Demandn1.7 Offer Curve and

5、Terms of Trade1.2 Trade Based on Absolute Advantage:Adam SmithnWith free trade,countries could concentrate their production on the goods they could produce most cheaply and enjoy all the consequent benefits from the labor division.uCost differences govern the international movement of goods.The conc

6、ept of cost is founded upon the labor theory of value.nTwo assumptions,within each country:uLabor is the only factor of production and is homogeneous(i.e.of one quality).uThe cost or price of a good depends exclusively upon the amount of labor required to produce it.1.2 Trade Based on Absolute Advan

7、tage:Adam SmithnAn arithmetic example uThe U.S.has an absolute advantage in iPad production;its iPad workers productivity(output per worker hour)is higher than that of the U.K,which leads to lower costs(less labor required to produce a set of iPad).uIn like manner,the U.K has an absolute advantage i

8、n cloth production.1.2 Trade Based on Absolute Advantage:Adam SmithA Case of Absolute AdvantageCountryOutput per Labor HouriPadClothU.K.U.S.5 sets15 sets20 yards10 yardsChapter 1 Classical Theories of International Traden1.1 Mercantilismn1.2 Trade Based on Absolute Advantage:Adam Smithn1.3 Trade Bas

9、ed on Comparative Advantage:David Ricardon1.4 Comparative Advantage and Opportunity Costn1.5 Comparative Advantage with More Than Two Commodities and Countriesn1.6 Theory of Reciprocal Demandn1.7 Offer Curve and Terms of Trade1.3 Trade Based on Comparative Advantage:David RicardonMutually beneficial

10、 trade can occur even when one country is absolutely more efficient in the production of all goods.uThe more efficient country should specialize in and export that good in which it is relatively more efficient(where its absolute advantage is bigger).uThe less efficient country should specialize in a

11、nd export the good in which it is relatively less inefficient(where its absolute disadvantage is smaller).uAssumptions of a simplified model l There are only two countries with a fixed level of technology in the world;lEach country owns only one input labor,which is fixed endowed and homogenous and

12、can move across industries but cannot flow across countries;l Each country produces two commodities;l Perfect competition and free trade prevail in markets.1.3 Trade Based on Comparative Advantage:David RicardonAn Example of Comparative AdvantageuThe U.S.labor has a 5-to-1 absolute advantage in the

13、production of iPads.The U.S.labor also has a 3-to-1 absolute advantage in the production of cloth.The U.S.has a greater absolute advantage in producing iPads than in producing cloth.uChina has an absolute disadvantage in the production of iPads and cloth.However,Chinas absolute disadvantage is small

14、er in producing cloth than in producing iPads.1.3 Trade Based on Comparative Advantage:David RicardoA Case of Comparative AdvantageCountryOutput per labor houriPadsClothRelative costU.S.5 sets15 yards1 iPad=3 yards of clothChina1 set5 yards1 iPad=5 yards of clothnGains from Specialization and Trade

15、with Comparative Advantage uAs the U.S.transfers 1 worker from cloth production to iPad production,its output of iPads increases by 5 and cloth production falls by 15 yards.uAs China transfers 3 workers from iPad production to cloth production,its cloth production increases by 15 yards and iPad prod

16、uction falls by 3.uThe gain from production and trade is the increase in the world output that results from each country specializing in its production according to its comparative advantage.1.3 Trade Based on Comparative Advantage:David RicardoThe Change in the World Output Resulting from Specializ

17、ationCountryChange in the production ofiPadsClothU.S.+5 sets-15 yardsChina-3 sets+15 yardsChange in the World Output+2 sets0nComparative Advantage in Money Terms uAt this wage rate,Chinas average cost in dollars of producing cloth is less than the U.S.average cost.With perfectly competitive markets,

18、Chinas selling price of cloth is lower than its U.S.selling price,and China exports cloth to the U.S.uEven though China is not as efficient as the U.S.in the production of cloth,its lower wage rate in terms of dollars more than compensates for its inefficiency.1.3 Trade Based on Comparative Advantag

19、e:David RicardoComparative Advantage in Money PricesCountry Labor InputHourly Wage RateiPad(sets)Cloth(yards)QuantityPriceQuantityPriceU.S.1$205$415$1.33China1$51$55$1Chapter 1 Classical Theories of International Traden1.1 Mercantilismn1.2 Trade Based on Absolute Advantage:Adam Smithn1.3 Trade Based

20、 on Comparative Advantage:David Ricardon1.4 Comparative Advantage and Opportunity Costn1.5 Comparative Advantage with More Than Two Commodities and Countriesn1.6 Theory of Reciprocal Demandn1.7 Offer Curve and Terms of Trade1.4 Comparative Advantage and Opportunity CostuOpportunity CostlOpportunity

21、cost is the quantity of one good that must be given up to release enough resources to produce one more unit of another good.lThe marginal rate of transformation(MRT)is the quantity of one good that it must abandon to produce each additional unit of another good.nGains from Specialization and Trade w

22、ith Opportunity Costs uBoth countries are better off when they specialize and trade.1.4 Comparative Advantage and Opportunity CostProduction and Consumption with and without TradeBased on an exchange ratio of 1 iPad=4 yards of clothItemCountryU.S.ChinaProduction at Full Employment100 iPads0 yard of

23、cloth0 iPad300 yards of clothConsumption with Trade50 iPads200 yards of cloth50 iPads100 yards of clothDomestic Production and Consumption without Trade50 iPads150 yards of cloth40 iPads100 yards of clothGains from Specialization and Trade50 yards of cloth10 iPadsnProduction Possibilities Frontier a

24、nd Constant Opportunity CostsuA production possibilities frontier(PPF)shows the different combinations of two goods that can be produced when all of a countrys factors of production are fully employed in their most efficient way.uThe slope of PPF is referred to as the marginal rate of transformation

25、(MRT),which shows the amount of one product a country must sacrifice to get one additional unit of the other product.uWithout specialization and trade,the U.S.and China can produce and consume at any point along their respective production possibilities frontiers.1.4 Comparative Advantage and Opport

26、unity Cost1.4 Comparative Advantage and Opportunity CostPPF for the U.S.and China at Full EmploymentU.S.ChinaNumbers of iPadsYards of ClothNumbers of iPadsYards of Cloth100060090305050806040100709030150601202020050150102504018003003021020240102700300lPoints below the PPF,say,Point B or B,represent p

27、ossible production combinations that can be produced but are inefficient because there would be some unemployed resources.lPoints above the PPF,say,Point C or C,represent production combinations that are not possible for a country to produce with available resources and technology.1.4 Comparative Ad

28、vantage and Opportunity Cost1.4 Comparative Advantage and Opportunity CostlWith each country specializing in the production of the good in which it has a comparative advantage,10 more iPads and 50 more yards of cloth are produced in the world.lWith trade,the set of consumption points that a country

29、can achieve is determined by the terms of trade the relative price of trading iPads for cloth,and vice versa.lBoth countries are better off by specializing and trade than they would be without trade.uChanges in the Gains from Specialization and Trade 1.4 Comparative Advantage and Opportunity CostPro

30、duction and Consumption with and without TradeBased on an exchange ratio of 1 iPad=3.5 yards of clothItemCountryU.S.ChinaProduction at Full Employment100 iPads0 yard of cloth0 iPad300 yards of clothConsumption with Trade50 iPads175 yards of cloth50 iPad125 yards of clothDomestic Production and Consu

31、mption without Trade50 iPads150 yards of cloth40 iPads100 yards of clothGains from Specialization and Trade0 iPad25 yards of cloth10 iPads25 yards of clothu As the international exchange ratio(terms of trade)changes from 1 iPad for 4 yards of cloth to 1 iPad for 3.5 yards of cloth,the trading possib

32、ilities curve moves for each country.Changes in the Terms of Trade for the U.S.and China 1.4 Comparative Advantage and Opportunity CostuDistribution of the Gains from Trade lChanges in a countrys terms of trade over time indicate whether a country can obtain more or less quantity of imports per unit

33、 of exports.A change in a countrys terms of trade may reflect a change in either international or domestic economic conditions.When the terms of trade change as a result of a change in domestic economic conditions,the effect on the countrys welfare is uncertain.1.4 Comparative Advantage and Opportun

34、ity CostuComplete Specialization l Each country specializes completely in the production of the good in which it has a comparative advantage and imports the other good.lComplete specialization occurs because as production expands in the industry with a comparative advantage,the domestic cost of prod

35、ucing the product does not rise.Constant costs are assumed to prevail over the entire range of production.1.4 Comparative Advantage and Opportunity CostlThe firms cost curves and the products supply curves are horizontal.Supply Curves of a Good and the PPF 1.4 Comparative Advantage and Opportunity C

36、ostnTrade under Increasing Opportunity Costs uIncreasing Costs and the PPFThe PPF and Supply Curve under Increasing Cost Conditions1.4 Comparative Advantage and Opportunity CostuThe slope of the PPF at any point is represented graphically by the slope of a tangent to that point.u A country has incre

37、asing opportunity costs.lthe tangent FG is steeper than DE.uTwo reasons:lthe factors of production used to produce the products are specialized in the production of a particular product.lthe premise that all resources are identical in the sense that all workers and capital have the same productivity

38、 in the production of both commodities is unrealistic.1.4 Comparative Advantage and Opportunity CostuProduction and Consumption without Specialization and Trade lWithout specialization and trade,the U.S.and China can produce and consume at any point on their PPF.uProduction and Consumption with Spec

39、ialization and Trade Specialization and Trade under Increasing Cost Conditions 1.4 Comparative Advantage and Opportunity CostTrade TriangleTrade TriangleuSpecializing in and exporting the good in which the country has a comparative advantage and trading for the other good enables both countries to b

40、ecome better off by consuming beyond their respective PPFs.uProduction under increasing cost conditions constitutes a mechanism that forces prices to converge and results in neither country specializing completely in the production of the good in which it has a comparative advantage.u In the case of

41、 increasing costs,both countries continue to produce both goods after trade and it is called as partial specialization.1.4 Comparative Advantage and Opportunity CostChapter 1 Classical Theories of International Traden1.1 Mercantilismn1.2 Trade Based on Absolute Advantage:Adam Smithn1.3 Trade Based o

42、n Comparative Advantage:David Ricardon1.4 Comparative Advantage and Opportunity Costn1.5 Comparative Advantage with More Than Two Commodities and Countriesn1.6 Theory of Reciprocal Demandn1.7 Offer Curve and Terms of Trade1.5 Comparative Advantage with More Than Two Commodities and CountriesnCompara

43、tive Advantage with More Than 2 CommoditiesuEach country will then have a comparative advantage in the commodities that it exports at the particular equilibrium exchange rate established.Commodity Prices in the U.S.and U.K.CommodityPrice in the U.S.($)Price in the U.K.()ABCDE246810643211.5 Comparati

44、ve Advantage with More Than Two Commodities and CountrieslIf the exchange rate is 1=$2,the dollar prices of the commodities in the U.K.would be:lThe U.S.will export Commodities A and B to the U.K.and import Commodities D and E from the U.K.,leaving Commodity C not traded.CommodityABCDEDollar price i

45、n the U.K1286421.5 Comparative Advantage with More Than Two Commodities and CountrieslIf the exchange rate becomes 1=$3.The dollar prices of the commodities in the U.K.would be:l The U.S.will export Commodities A,B and C to the U.K.and import Commodities D and E from the U.K.CommodityABCDEDollar pri

46、ce in the U.K18129631.5 Comparative Advantage with More Than Two Commodities and CountrieslIf the exchange rate turns to be 1=$1,the dollar prices of the commodities in the U.K.would be:l The U.S.would export only Commodity A to the U.K.and import all other commodities,with the exception of Commodit

47、y B.CommodityABCDEDollar price in the U.K64321nComparative Advantage with More Than 2 Countries uGiven the equilibrium PW/PC=3 with trade,Countries A and B will export wheat to Countries D and E in exchange for cloth.Country C will not engage in international trade in this case because its pre-trade

48、 PW/PC equals the equilibrium PW/PC with trade.uGiven a trade equilibrium PW/PC=4,Countries A,B and C will export wheat to Country E in exchange for cloth,and Country D will not engage in the international trade.uIf the equilibrium turns to be PW/PC=2 with trade,Country A will export wheat to all th

49、e other countries except Country B,in exchange for cloth.1.5 Comparative Advantage with More Than Two Commodities and CountriesRanking of Countries in Terms of International PW/PCCountryABCDEPW/PC12345Chapter 1 Classical Theories of International Traden1.1 Mercantilismn1.2 Trade Based on Absolute Ad

50、vantage:Adam Smithn1.3 Trade Based on Comparative Advantage:David Ricardon1.4 Comparative Advantage and Opportunity Costsn1.5 Comparative Advantage with More Than Two Commodities and Countriesn1.6 Theory of Reciprocal Demandn1.7 Offer Curve and Terms of Trade1.6 Theory of Reciprocal DemandnTheory of

51、 reciprocal demand suggests that the actual price at which trade takes place depends on the trading partners interacting demands.nAccording to the theory of reciprocal demand,final terms of trade will be closer to the domestic price ratio of the country with stronger demand for the imported good.nTh

52、e reciprocal demand theory contends that the equilibrium terms of trade depend on the relative strength of each countrys demand for the other countrys product.1.6 Theory of Reciprocal DemanduThe stronger Canadian demand for autos relative to U.S.demand for wheat,the closer the terms of trade will be

53、 to Canadian domestic price ratio,and vice versa.Equilibrium Terms-of-Trade Limits 1.6 Theory of Reciprocal DemandnThe reciprocal demand theory best applies when both countries are of equal economic size,so that the demand of each country has a noticeable effect on the market price.nIf one country i

54、s significantly larger than the other,the larger country attains fewer gains from trade while the smaller country attains most of the gains from trade.This situation is characterized as the importance of being unimportant.Chapter 1 Classical Theories of International Traden1.1 Mercantilismn1.2 Trade

55、 Based on Absolute Advantage:Adam Smithn1.3 Trade Based on Comparative Advantage:David Ricardon1.4 Comparative Advantage and Opportunity Costn1.5 Comparative Advantage with More Than Two Commodities and Countriesn1.6 Theory of Reciprocal Demandn1.7 Offer Curve and Terms of Trade1.7 Offer Curve and T

56、erms of TradenOffer CurveuThe offer curve(or reciprocal demand curve)of a country indicates the quantity of imports and exports the country is willing to buy and sell on the world market at all possible relative prices.uIn short,the curve shows the countrys willingness to trade at various possible t

57、erms of trade.uThe offer curve really is a combination of a demand curve and a supply curve.1.7 Offer Curve and Terms of TradeuDeriving an offer curve:trade triangle approachTrade Triangles at Two Possible Terms of Trade 1.7 Offer Curve and Terms of Tradeu The construction of the offer curve is comp

58、leted by connecting all possible points at which a country is willing to trade.Alternative Terms of Trade and Export-Import Combinations on the Offer Curve 1.7 Offer Curve and Terms of TradenEquilibrium Terms of Trade uPoint E is the trading equilibrium.TOTE is the market-clearing price ratio.Tradin

59、g Equilibrium 1.7 Offer Curve and Terms of TradeuShifts of Offer Curves Shifts in Country Is Offer Curve Reasons for Shifts:lA change in tastes for the imported good;lA rise in income that leads to an increased demand for imports;lAn improvement in productivity in Country Is export industries.1.7 Of

60、fer Curve and Terms of TradelWhen offer curves shift,the equilibrium terms of trade and volume of trade change.Increased Demand for Imports by Country I 1.7 Offer Curve and Terms of TradeuTerms of Trade Estimates lThe relative price ratio PX/PY in the offer curve diagram is called as the commodity t

61、erms of trade,or net barter terms of trade.lThe economic interpretation of the terms of trade:As the price of exports rises relative to the price of imports,each unit of a countrys exports is able to purchase a larger quantity of imports.Thus,more imports,which like any other goods bring utility to

62、consumers,can be obtained with a given volume of exports,and the countrys welfare on the basis of those price relations alone has improved.1.7 Offer Curve and Terms of TradelIn calculating the terms of trade for any given country,a price index must therefore be calculated for exports and imports.The

63、 price index is a weighted average of the prices of many goods,calculated for comparison with a base year.The base-year price indices are then set at values of 100,and other years can be compared with them.lOver a long period,terms of trade illustrates how a countrys share of the world gains from tr

64、ade changes and gives a rough measure of the fortunes of a country in the world market.1.7 Offer Curve and Terms of TradenOther Concepts of the Terms of Trade uIncome Terms of TradelTOTY=(PX/PM)QX or(PXQX)/PMwhere QX is the quantity index of exports.uSingle Factoral Terms of TradelTOTSF=(PX/PM)OXwhere OX is the productivity index.uDouble Factoral Terms of TradelTOTDF=(PX/PM)(OX/OM)where OM represents the foreign productivity index for the home countrys imports.