EC239- Final Exam Guide - Comprehensive Notes for the exam ( 123 pages long!)
Document Summary
1. 1 brief history of international trade theory: 15th-18th cen. The > $ supply => ^ price in the lr, decreasing the demand for domestic goods (exports) and ^ the demand for cheaper foreign goods (imports: this eventually eliminates the trade surplus, mercantilist view of the world economy. : 2 swedish economists, eli heckscher & bertil ohlin developed a trade theory (heckscher-ohlin model) showing that a country will produce and export goods that uses its relatively abundant factor ore intensively. International trade theory took a new turn in the 1980s with the development of new trade theory: relaxes some of the assumptions of previous models by allowing ^ returns to scale & imperfect completion. 1. 3 topics covered in the study of international trade. Gdp, along with (b) the distance between trading partners, as crucial in determining the volume of trade between the two countries. The gravity model and the logic behind it.
