ECON 101 Lecture 6: Lecture 06 - World Trade Equilibrium in Classic Trade Theory
Document Summary
Lecture 06 - world trade equilibrium in classic trade theory. Goal of this lecture: derive relative supply and relative demand in the world market to work towards. World trade equilibrium (taking heckscher-ohlin as benchmark model: close classic trade models with world trade equilibrium (starting with. Heckscher-ohlin, then specific factors, then ricardo: revisit gains from trade in world trade equilibrium (starting with ricardo, ten. Terms of trade: terms of trade =(cid:3017)(cid:3257)(cid:3290) (cid:3254)(cid:3291)(cid:3290)(cid:3293)(cid:3295)(cid:3294) (cid:3017)(cid:3257)(cid:3290) (cid:3258)(cid:3291)(cid:3290)(cid:3293)(cid:3295)(cid:3294, welfare typically improves with rising tot and worsens with falling tot. Your export price rises with respect to your imports, so you make more money than you pay (than before: in a two country world with 2 industries, one country"s tot is the reciprocal of the other. I import what they export, they import what i export. We can then find each country"s (cid:3018)(cid:3018)(cid:3255) ratio by finding each country"s supply supply curve curve intersection with that set price ratio.
