国际经济学英文版章节幻灯片chap002

1、2,Foundations of Modern Trade Theory: Comparative Advantage,Introduction,Basis for trade Why do nations export and import? Terms of trade Gains from international trade Specific to production and consumption,Modern Trade Theory Historical Development,The Mercantilists Concern: Regulation of domestic and international affairs to promote national interests Solution: Strong foreign-trade sector Favorable trade balance Advocated government regulation of trade,Historical Development,Criticism of Merc

2、antilist policies David Humes price-specie-flow doctrine Favorable trade balance possible only in the short run; over time it would automatically be eliminated Adam Smiths “The Wealth of Nations” Challenged the static view of wealth Dynamic view International trade increases the level of productivity within a country, which in turn increases world output,Continued,Why Nations Trade? Absolute Advantage,Adam Smith Free trade and international division of labor Cost differences govern movement of g

3、oods Productivities of factor inputs represent the major determinant of production cost Determination of competitiveness from the supply side of the market Concept of cost: Labor theory of value Labor is the only factor of production and is homogeneous Cost depends on labor requirements,Why Nations Trade?,Principle of absolute advantage Import goods in which a nation has an absolute cost disadvantage Export those goods in which it has an absolute cost advantage (Example: Table 2.1),Continued,Bac

4、k,Why Nations Trade?,David Ricardo: Comparative advantage Mutually beneficial trade can occur even when one nation is absolutely more efficient in the production of all goods Less efficient nation: Specialize in and export the good in which it is relatively less inefficient More efficient nation: Specialize in and export that good in which it is relatively more efficient Examples of comparative advantages (Table 2.2),Continued,Back,Why Nations Trade?,Assumptions of Ricardos model: World consists

5、 of two nations, each using a single input to produce two commodities Labor is the only input Labor can move freely among industries within a nation but is incapable of moving between nations Level of technology is fixed for both nations Costs do not vary with level of production and are proportional to the amount of labor used,Continued,Why Nations Trade?,Assumptions of Ricardos model (cont.): Perfect competition prevails in all markets Free trade occurs between nations Transportation costs are

6、 zero Firms make production decisions to maximize profits; consumers maximize satisfaction through consumption decisions There is no money illusion Trade is balanced, no flows of money between nations Comparative-advantage principle (Table 2.3),Continued,Back,Production Possibilities Schedules,Used to explain comparative advantage Shows production combinations of two goods when all factor inputs are used most efficiently Illustrates the maximum output possibilities Marginal rate of transformatio

7、n (MRT) Amount of one product a nation must sacrifice to get one additional unit of the other product Hypothetical production possibilities schedules for the U.S and Canada: (Figure 2.1),Back,Trading Under Constant-Cost Conditions,Principle of comparative advantage under constant opportunity costs Basis for trade and direction of trade Gains from trade Two reasons for constant costs: Factors of production are perfect substitutes for each other All units of a given factor are of the same quality,

8、Trading Under Constant-Cost Conditions,Basis for trade and direction of trade Relative costs (Figure 2.1) Point A U.S: 40 autos and 40 bushels of wheat Point Al Canada: 40 autos and 80 bushels of wheat Relative cost of producing an additional auto 0.5 bushels of wheat for the United States 2 bushels of wheat for Canada Direction of trade United States specializing in and exporting autos Canada specializing in and exporting wheat,Continued,Trading Under Constant-Cost Conditions,Production gains f

9、rom specialization Refer (Figure 2.1) United States moves from production point A to B, totally specializing in auto production Canada totally specializes in wheat production by moving from Al to Bl Summary of production gains (Table 2.4a),Continued,Back,Trading Under Constant-Cost Conditions,Consumption gains from trade (Figure 2.1) Specialization and trade Achieve consumption points outside domestic production possibilities schedules Terms of trade: Rate at which its export product is traded for the other countrys export product Determines the set of posttrade consumption points Defines the relative prices at which two products are traded Trading possibilities line: Line tt represents the international terms of trade for both countries,Continued,Trading Under Constant-Cost Conditions,Consumption gains from trade (Figure 2.1) Trade triangle: The triangle BCD (Bl Cl Dl for Canada) showing the U.S. Exports (along the horizontal axis), Imports (along the vertical axis), and Ter

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