文档介绍：Chapter 5
The Standard Trade Model
1
anization
Introduction
A Standard Model of a Trading Economy
International Transfers of e: Shifting the RD Curve
Tariffs and Export Subsidies: Simultaneous Shifts in RS and RD
Summary
Appendix: Representing International Equilibrium with Offer Curves
2
Introduction
Previous trade theories have emphasized specific sources parative advantage which give rise to international trade:
Differences in labor productivity (Ricardian model)
Differences in resources (specific factors model and Heckscher-Ohlin model)
The standard trade model is a general model of trade that admits these models as special cases.
3
A Standard Model of a Trading Economy
The standard trade model is built on four key relationships:
Production possibility frontier and the relative supply curve
Relative prices and relative demand
World relative supply and world relative demand
Terms of trade and national welfare
4
A Standard Model of a Trading Economy
Production Possibilities and Relative Supply
Assumptions of the model:
Each country produces two goods, food (F) and cloth (C)
Each country’s production possibility frontier is a smooth curve (TT)
The point on its production possibility frontier at which an economy actually produces depends on the price of cloth relative to food, PC/PF.
Isovalue lines
Lines along which the market value of output is constant
5
Figure 5-1: Relative Prices Determine the Economy’s Output
Q
Isovalue lines
TT
A Standard Model of a Trading Economy
Cloth production, QC
Food production, QF
6
Figure 5-2: How an Increase in the Relative Price of Cloth Affects Relative Supply
Q1
VV1(PC/PF)1
Q2
VV2(PC/PF)2
A Standard Model of a Trading Economy
TT
Cloth production, QC
Food production, QF
7
Relative Prices and Demand
The value of an economy's consumption equals the value of its production:
PCQC + PFQF = PCDC + PFDF = V
The economy’s choice of a point on the isovalue line depends on the tastes of its consumers, w