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31 Cards in this Set
- Front
- Back
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Specialization
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In the economic sense, the social phenomenon of individual human beings or organizations each concentrating their productive efforts on a rather limited range of tasks.
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Comparative advantage
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In economics, comparative advantage refers to the ability of a person or a country to produce a particular good at a lower opportunity cost than another person or country.
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GDP and GDP per capita
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- The gross domestic product (GDP) or gross domestic income (GDI) is one of the measures of national income and output for a given country's economy.
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Economic development vs Economic Growth
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the development of economic wealth of countries or regions for the well-being of their inhabitants - Economic growth is the increase in the amount of the goods and services produced by an economy over time
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Productivity
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in economics refers to metrics and measures of output from production processes, per unit of input
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Factors of Production
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In economics, factors of production (or productive inputs) are the resources employed to produce goods and services.
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Factor Price Equalization
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(Stopler-Samuleson Theorem) In open economics, international trade will cause the price of the factors of production to equalize.
Brazil= KLLL>World= KKLL<US= KKKL |
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Aggregate Social Welfare
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collective welfare of a society
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Positive vs Normative
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Positive= "why"/analytical (testable)
Normative= "should"/moral |
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Factor Endowments
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how much of each factor
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Societal Interests
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what the society wants =>effects gov policies => effects IPE
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Political Institutions
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The formal and informal rules that structure collective decision making (politics). These rules establish who can legitimately participate in the political process, how these participants will make collective decisions, and how they will ensure compliance with the decisions they make. Such rules thus enable groups in countries and groups of countries in the international state system to reach and enforce collective decisions.
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Home market bias
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People buy goods from their home countries: Why? Patriotism, knowledge of goods
Effects IPE by imperfect competition |
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Feldstein Horioka Puzzle
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Assuming perfect capital mobility, s=/i w/in a country, instead world economy should see s=i. This is not the case (s and i positively correlated). Why? not completely open market
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Capital controls
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In economics, capital control is the monetary policy device that a country's government (i.e., sovereign power) uses to regulate the flows into and out of a country's capital account, i.e., the flows of investment-oriented money into and out of a country or currency. Capital Controls have become more prominent in the years since the Clinton Administration blessed the efforts of the world community to create the World Trade Organization (WTO), primarily because Globalization has increased the acceleration of currency domain strengh, in other words, giving some currencies utility far beyond their physical geographic boundaries.
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Externalities or market failures
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Market failures that arise when the parties to a given transaction do not bear the full cost of or realize the full benefit from their transaction.
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International Capital Mobility
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Potential costs of international capital mobility: (i) reduced ability to run national redistributive policies, hence "race to the bottom" in capital taxation and transfer of wealth from labor to capital; (ii) vulnerability to noise-driven financial crises.
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Strategic Interaction
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Game Theory
Chicken Battle of the Sexes Prisoner's Dilemma |
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Hegemony
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One thing rules all (or a collection of things)
USA (was), OPEC is for Oil |
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Consumption indifference curves
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Decides how many shoes and computers Americans want
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Production Possibility frontier
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possible productions of various goods in an economy
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Heckscher-Ohlin Theory
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explains why countries have comparative advantages in certain goods: Country will export the factors of production it has a relative abundance of (ie, US has $ (K), China has L)
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Stolper Samuelson Theorem
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given the specialization of HO, shows the distributed effects of trade (who wins, who loses): Assume perfect factor mobility between sectors:
Scarce factor loses as demand for it fails **HO-SS L not good for Intra-Industry trade (why does Germany export cars to US?) as it assumes no factor mobility and perfect |
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Rent-seeking
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gain not from production, but more from manipulation (like monopolies)
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returns to scale
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Returns to scale refers to a technical property of production that examines changes in output subsequent to a proportional change in all inputs (where all inputs increase by a constant factor). If output increases by that same proportional change then there are constant returns to scale (CRTS). If output increases by less than that proportional change, there are decreasing returns to scale (DRS). If output increases by more than that proportion, there are increasing returns to scale (IRS)
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Smoot Hawley Act
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Trade legislation passed by the US legislature in 1930 that raised the average American tariff to a historic high of almost 60 percent. Widely reagarded to have contributed to the collapse of the world trade and monetary systems and deepened the global depression during the 1930s.
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Logrolling
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Produces a final tariff bill that raises tariffs on a much larger number of items than any member of congress desired.
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Ricardo Viner Model-
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Factors are specific to industries, even in the long run. Trade liberalization benefits all factors in an export sector and harms all factors in an import competing sector. Therefore, sector/industry based conflict over trade policy.
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RTAA
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reciprocal trade agreements act- American trade legislation passed in 1934 in which Congress allowed the executive to reduce tariffs by as mush as 50 percent in exchange for equivalent concessions from foreign governments. Created the institutional framework for reciprocal tariff reduction achieved under the GATT following WWII.
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Generalized System of Preferences
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Advanced industrialized countries can allow manufactured exports from developing countries to enter their markets at preferential tariff rates. It is a legal exception to the principle on non discrimination.
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Dispute Settlement Mechanism
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ensures that the governments comply with the rules they establish. Individual compliance with established rules i snot guaranteed. Even though most governments comply with most of their WTO obligations most of the time, there are times when they don’t . If actors believed they could disregard WTO rules with impunity, they would comply less often. The dispute settlement mechnism ensures compliance by helping governments resolve disputes and by authorizing punishments in the event on non-compliance. There is an independent judicial tribunal, which investigates the facts and the relevant WTO rules whenever a dispute is initiated and thenr eaches a finding. Governments found in the wrong must alter the offending policy or compensate the country or countries that are harmed.
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