What is International Economics About?

Presentation on theme: "What is International Economics About?"— Presentation transcript:

1 What is International Economics About?
The Balance of Payments Some countries run large trade surpluses. For example, in 1998 both China and South Korea ran trade surpluses of about $40 billion each. Is it good to run a trade surplus and bad to run a trade deficit? Exchange Rate Determination The role of changing exchange rates is at the center of international economics. Copyright © 2003 Pearson Education, Inc.

2 What is International Economics About?
International Policy Coordination A fundamental problem in international economics is how to produce an acceptable degree of harmony among the international trade and monetary policies of different countries without a world government that tells countries what to do. The International Capital Market There are risks associated with international capital markets: Currency depreciation National default Copyright © 2003 Pearson Education, Inc.

3 International Economics: Trade and Money
International trade analysis focuses primarily on the real transactions in the international economy. These transactions involve a physical movement of goods or a tangible commitment of economic resources. Example: The conflict between the United States and Europe over Europe’s subsidized exports of agricultural products Copyright © 2003 Pearson Education, Inc.

4 International Economics: Trade and Money
International monetary analysis focuses on the monetary side of the international economy. That is, financial transactions such as foreign purchases of U.S. dollars. Example: The dispute over whether the foreign exchange value of the dollar should be allowed to float freely or be stabilized by government action Copyright © 2003 Pearson Education, Inc.

5 學習經濟模型五步驟 模型目的：確認模型目的。 內生變數：依據模型目的選擇最重要的兩個變數為內 生變數，並置於圖形之兩軸。
內生變數：依據模型目的選擇最重要的兩個變數為內 生變數，並置於圖形之兩軸。 行為法則：觀察經濟行為人之行為法則，找出前述兩 個內生變數間之關係或寫出經濟行為方程 式，藉以畫出圖形中之曲線。因此，兩個 內生變數的關係為線上點的移動。 均衡：依據前述行為法則所求導出之曲線，找出模型 的均衡。 Copyright © 2003 Pearson Education, Inc.

6 學習經濟模型五步驟 外生衝擊：整條線之移動。 判斷是否為外生變數改變？ –外生變數：經濟行為方程式中內生變數以外 之變數。
–外生變數：經濟行為方程式中內生變數以外 之變數。 判斷此外生變數之改變將影響哪些行為法則。(造成模型中哪些曲線移動)？ 判斷此外生變數之改變造成行為法則何種影響。(模型中之曲線往哪個方向移動)？ Copyright © 2003 Pearson Education, Inc.