CLASS NOTES FOR ECONOMICS 251
DR. WILLIAM SHINGLETON
FALL 2005
THESE NOTES ARE FOR DECEMBER 6, 2005
THIS WEEK CH 35
REVIEW GET
CURRENT DATA
WWW.BEA.DOC.GOV
IMPORTS 1473 B
JAN-SEP
EXPORTS 943 B JAN-SEP
NET EXPORTS
(TRADE BALANCE)
TRADE
SURPLUS
TRADE
DEFICIT 500 B JAN-SEP
MULTIPLIER EFFECT
DEFINE
CLOSED ECONOMY
OPEN ECONOMY
NORTH
KOREA (2001)
17 B GDP
560
M MISSILE/COMPONENT EXPORTS 3.3 PCT
TRADE CONTRACTS
USUALLY WRITTTEN
IN U.S. DOLLARS
USUALLY WRITTTEN
IN BRITISH ENGLISH
WATCH FOR C.I.F.
VS F.O.B. PRICES
GROWTH AND TRADE
ARE TIED
BRITAIN/19TH
UNITED
STATES/19TH
JAPAN/20TH
CHINA/20TH
IRELAND/20TH
INDIA/21ST
CLOSED ECONOMIES
STAGNATE
EUROPE/20TH
CHINA/20TH
INDIA/20TH
EXPORT RATIO
GROSS EXPORTS/GDP
11 PCT
FOR UNITED STATES
POOR
MEASURE OF HEALTH
OTHER
FACTORS
SIZE
OF DOMESTIC MARKET
TRADE
BARRIERS
GAINS FROM TRADE
SPECIALIZATION
THRU TRADE
INCREASED WORLD OUTPUT
INTERDEPENDENCE
BROADER CONSUMPTION POSSIBILITIES FOR
ALL
COMPARATIVE ADVANTAGE
PRODUCTIVITY
PROBLEMS IN JOB TRANSITION
WHICH WAY DO THE JOBS GO?
WHICH JOBS?
PRODUCTION POSSIBILITIES
CONSUMPTION POSSIBILITIES
INCREASES CHOICES
CHOICES NO LONGER
LIMITED TO PRODUCTION
COMPARATIVE
ADVANTAGE
NATURAL
ENDOWMENTS
IMPORTS
EXPORTS
MULTILATERAL
TRADE
SPECIALIZATION
EFFECTS
JOBS NO
EFFECT
INCOME
IS HIGHER
SOME
WINNERS, SOME LOSERS
GAINS FROM TRADE
MERCANTILISM
ABSOLUTE
ADVANTAGE
COMPARATIVE
ADVANTAGE/OPPORTUNITY COST
EXAMPLE
TERMS OF TRADE
MARGINAL PROPENSITY TO IMPORT (MPM)
REDUCES SIZE OF
MULTIPLIER
LOGIC
ALGEBRA
REDUCE THE EFFECT
OF FISCAL STIMULUS
GLOBAL AUTOMATIC
STABILIZER
TRADE GOALS VS DOMESTIC GOALS
FISCAL STIMULUS
ADDS TO THE ECONOMY AND
1. REDUCES UNEMPLOYMENT
2.
INCREASES IMPORTS
3.
WIDENS THE TRADE DEFICIT
BARRIERS TO TRADE
SMOOT-HAWLEY
REASONS
JOBS AND
PROFITS/IMPORT COMPETING INDUSTRIES
DUMPING/STEEL
NATIONAL
SECURITY/COMPUTERS
INFANT
INDUSTRIES/CHINA
BEGGAR-THY-NEIGHBOR/JAPAN
VISIBILITY
OF EXPORTS
FREE TRADE WITH
SUPPLY AND DEMAND /PG 745
TARIFFS
COUNTERVAILING
DUTIES
SHOW
WITH SUPPLY AND DEMAND/PG 745
PROHIBITIVE
TARIFF
NON-PROHIBITIVE
TARIFF
QUOTAS
SHOW
WITH SUPPLY AND DEMAND/PG 745
SOME AS SWEET
AS SUGAR
HEALTH AND SAFETY REGULATIONS
(US HORMONES)
Bovard,
James. The Free Trade Fraud includes a
list of the idiotic things the American
consumer is protected from
WE
ARE PROTECTED AGAINST FOREIGN TOMATOES, ICE CREAM, WOMEN'S UNDERWEAR, STEEL,
SUGAR, POTATO CHIPS, PHOTO ALBUMS, PEARS, MIRRORS, CEMENT, ROOFING SHINGLES,
CODFISH, TELEVISIONS, PAINTBRUSHES, MOTORCYCLE BATTERIES, STAPLES, STAPLERS,
MARTIAL ARTS UNIFORMS, RADIOS, FORKLIFTS, WOOL, HAM, CASTOR OIL, CARNATIONS,
PISTACHIOS, TOWELS, ROSES, GLASS, SCISSORS, BALL BEARINGS,...
WORLD TRADE
WORLD EXPORTS =
WORLD IMPORTS
U.S. DEFICIT => WORLD TRADE SURPLUS BY OTHERS
EUROPEAN UNION
ABOUT 25
MEMBERS (APR2004) CHECK
THIS/OK AS OF NOV2005
ATTEMPTING
COMMON MACRO POLICIES
RESTRICTIONS
ON MACRO CHOICES
REJECTED
NEW CONSTITUTION
NAFTA
UNITED
STATES, CANADA, MEXICO
ONLY
TRADE, NOT CURRENCY
CAFTA/2005
U.S., EL
SALAVADOR, COSTA RICA, DOMINICAN REPUBLIC,
HONDURAS,
NICARAGUA, GUATEMALA
ONLY
TRADE, NOT CURRENCY