The document provides an overview of the gravity model in international economics. It discusses that the gravity model shows that trade between countries depends on their economic sizes and is inversely related to the distance between them. Over time, improvements in transportation and communication have reduced the negative effects of distance on trade, and political factors like wars can significantly impact trade patterns. The types of goods traded have also changed over time, with manufacturing now making up the largest percentage of world trade compared to agricultural and mineral products in the past.
International movements-meaning-Export & import of merchandise & services-International investment-International Payments, Rate of exchange, Economic integration
International movements-meaning-Export & import of merchandise & services-International investment-International Payments, Rate of exchange, Economic integration
2. Theories of International Trade, Tariff and Non-tariff barriers and Trade ...Charu Rastogi
This presentation starts with an overview of the initial theories of international trade like mercantilism, theory of absolute advantage, theory of comparative advantage and factor proportions theory. It goes on to discuss trade barriers, tariff and non-tariff barriers and trade blocks.
2. Theories of International Trade, Tariff and Non-tariff barriers and Trade ...Charu Rastogi
This presentation starts with an overview of the initial theories of international trade like mercantilism, theory of absolute advantage, theory of comparative advantage and factor proportions theory. It goes on to discuss trade barriers, tariff and non-tariff barriers and trade blocks.
From the textbook (Colander, David C. Macroeconomics, 7th Edition.docxMARRY7
From the textbook (Colander, David C. Macroeconomics, 7th Edition. McGraw-Hill Learning
Solution
s) read the following chapters:
16: International Trade Policy, Comparative Advantage, and Outsourcing
17: International Financial Policy
16: International Trade Policy, Comparative Advantage, and Outsourcing
One of the purest fallacies is that trade follows the fl ag. Trade follows the lowest price current. If a dealer in any colony wished to buy Union Jacks, he would order them from Britain's worst foe if he could save a sixpence.
—Andrew Carnegie
Patterns of Trade
Before I consider these issues, let's look at some numbers to get a sense of the nature and dimensions of international trade.
Increasing but Fluctuating World Trade
In 1928, total world trade was about $500 billion (in today's dollars). U.S. gross domestic product (GDP) was about $830 billion, so world trade as a percentage of U.S. GDP was almost 60 percent. In 1935, that ratio had fallen to less than 30 percent. In 1950 it was 20 percent. Then it started rising. Today it is about 250 percent, with world trade amounting to about $32 trillion. As you can see, international trade has been growing, but with significant fluctuations in that growth. Sometimes international trade has grown rapidly; at other times it has grown slowly or has even fallen.
In part, fluctuations in world trade result from fluctuations in world output. When output rises, international trade rises; when output falls, international trade falls. Fluctuations in world trade are also in part explained by trade restrictions that countries have imposed from time to time. For example, decreases in world income during the Depression of the 1930s caused a large decrease in trade, but that decrease was exacerbated by a worldwide increase in trade restrictions.
Differences in the Importance of Trade
The importance of international trade to countries' economies differs widely, as we can see in the table below, which presents the importance of the shares of exports—the value of goods and services sold abroad—and imports—the value of goods and services purchased abroad—for various countries.
Among the countries listed, the Netherlands has the highest amount of exports compared to total output; the United States has the lowest.
The Netherlands' imports are also the highest as a percentage of total output. Japan's are the lowest. The relationship between a country's imports and its exports is no coincidence. For most countries, imports and exports roughly equal one another, though in any particular year that equality can be rough indeed. For the United States in recent years, imports have generally significantly exceeded exports. But that situation can't continue forever, as I'll discuss.
Total trade figures provide us with only part of the international trade picture. We must also look at what types of goods are traded and with whom that trade is conducted.
What and with Whom the United States Trades
The majority of U.S. ...
World trade in goods and services – major trends and developmentsmeenee
This ppt shows how trade has emerged and evolved. Further, the graphs and charts, picked from wto reports show the trade pattern wrt the year 2011. Further, recent trends in world trade are mentioned.
Fiduciary or paper money is issued by the Central Bank on the basis of
computation of estimated demand for cash. Monetary policy guides the Central
Bank’s supply of money in order to achieve the objectives of price stability (or low
inflation rate), full employment, and growth in aggregate income.
- The worldwide movement toward economic, financial, trade, and communications integration.
Globalization implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. However, it does not include unhindered movement of labor and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
2. Objectives
1. Explain that the value of trade between any two countries depends
on the size of these countries’ economies and inversely related to
the distance between two.
2. Understand how borders reduce trade.
3. Describe changes in amount of global trade over time and changes
in the mix of goods and services traded internationally.
3. Fig. 2-1: Total U.S. Trade with Major Partners, 2015
• The 5 largest trading partners
with the U.S. in 2015 were
China, Canada, Mexico,
Japan, and Germany.
• The largest 15 trading
partners with the U.S.
accounted for 75% of the
value of U.S. trade in 2015.
4. Size Matters
• 3 of the top 10 trading partners with the U.S. in 2015 were also the 3
largest European economies: Germany, the United Kingdom, and France.
– These countries have the largest GDP, the value of goods and services
produced in an economy, in Europe.
• China and Japan were the largest and fourth largest trading partners
with the U.S. in 2015.
– China and Japan were the second and third largest economies in the world.
5. Fig. 2-2: The Size of European Economies, and the Value of Their Trade with the
United States
Among America’s 15 most important
Western European trading partners
• Large economies like Germany and U.K. have
larger share of trade with the U.S.
• Small economies like Austria and Sweden have
small share of trade with the U.S.
• A strong positive correlation between size of
economy measured by GDP and volume of
trade between the U.S. and European countries.
List and Map of European countries by GDP
6. Distance Matters
• Canada and Mexico were the second and third largest trading
partners with the U.S. in 2015.
• European countries trade with each others (intra-EU trade) more than
with other countries outside of Europe.
• In general, countries tend to trade with nearby economies.
7. Fig. 2-3: Economic Size and Trade
with the United States
The United States does markedly more
trade with its neighbors than it does
with European economies of the same
size.
• Canada and Mexico were the largest and
third largest trading partners with the U.S.
in 2015.
• Their economies are smaller than Germany,
France, and U.K.
List and Map of Countries by GDP
8. The Gravity Model (Size of Economy)
• The size of an economy is directly related to the volume of imports
and exports.
– Larger economies produce more goods and services, so they have more to sell
in the export market.
– Larger economies generate more income from the goods and services sold, so
they are able to buy more imports.
• Trade between any two countries is larger, the larger is either country.
9. The Gravity Model (Distance)
• The distance between two economies is inversely related to the
volume of imports and exports between them.
– Distance between economies influences transportation costs.
– Distance is a proxy for more intangible aspects of a trading relationship such
as the ease of contact for firms.
• Trade between any two countries is larger, the closer are these
countries.
10. The Gravity Model – Formula
The gravity model assumes that size and distance are important for
trade in the following way:
where
Tij is the value of trade between country i and country j
A is a constant
Yi the GDP of country I, Yj is the GDP of country j
Dij is the distance between country i and country j
i j
ij
ij
A Y Y
T
D
11. The Gravity Model – Numerical Example
U.S. Trade with Canada and Mexico in 2012
Suppose A = 25, how much trade is the U.S. expected to have with these
countries according to the gravity model?
GDP Distance Actual Trade Tij
U.S. $16.2 trillion
Canada $1.8 trillion 1,400 miles $617 billion
Mexico $1.2 trillion 1,000 miles $494 billion
• Trade with Canada: 25 x $16.2 x $1.8 / 1,400 = $521 billion
• Trade with Mexico: 25 x $16.2 x $1.2 / 1,000 = $486 billion
12. General Form of Gravity Model
• More generally, the gravity model has the following form
Tij = A x Yi
a x Yj
b /Dij
c
When a, b, and c are equal to 1, this is exactly same as the simple gravity
model.
• Taking log in both sides,
ln(Tij) = lnA +a x ln(Yi) +b x ln(Yj) – c x ln(Dij)
Where a, b, and c are constant (coefficients to be estimated empirically).
13. Using the Gravity Model: Looking for
Anomalies
A gravity model fits the data on U.S. trade with European countries well
but not perfectly.
The Netherlands, Belgium and Ireland trade much more with the
United States than predicted by a gravity model.
• Ireland has strong cultural affinity due to common language and history of
migration.
• The Netherlands and Belgium have transport cost advantages due to their
location.
14. Impediments to Trade: Barriers and Borders
Other things besides size and distance matter for trade:
1. Cultural affinity: close cultural ties, such as a common language, usually lead
to strong economic ties.
2. Geography: ocean harbors and a lack of mountain barriers make
transportation and trade easier.
3. Multinational corporations: corporations spread across different nations
import and export many goods between their divisions.
4. Borders: crossing borders involves formalities that take time, often different
currencies need to be exchanged, and perhaps monetary costs like tariffs
reduce trade.
• Borders increase the cost and time needed to trade.
15. Trade Agreements
• Trade agreements between countries are intended to reduce the
formalities and tariffs needed to cross borders, and therefore to
increase trade.
• The U.S. signed a free trade agreement with Mexico and Canada in
1994, the North American Free Trade Agreement (NAFTA).
• Because of NAFTA and because Mexico and Canada are close to the
U.S., the amount of trade between the U.S. and its northern and
southern neighbors as a fraction of GDP is larger than between the
U.S. and European countries.
16. The Changing Pattern of World Trade: Has the
World Gotten Smaller?
• The negative effect of distance on trade according to the gravity
models is significant, but has grown smaller over time due to modern
transportation and communication.
• Technological advancement in transportation and communication
occurred in
– 17th century: Discovery of new world
– 19th century: Industrial revolution
– 21st century: Information technology revolution
17. Fig. 2-5: The Fall and Rise of World Trade
The ratio of world exports of
manufactured goods to world
industrial production
• rose in the decades before
World War I
• but fell sharply in the face of
wars and protectionism.
• It didn’t return to 1913 levels
until the 1970s but has since
reached new heights.
18. The Changing Pattern of World Trade: Political
Factors
• Political factors, such as wars, can change trade patterns much more
than innovations in transportation and communication.
• World trade grew rapidly from 1870 to 1913.
– Then it suffered a sharp decline due to the two world wars and the Great
Depression.
– It started to recover around 1945 but did not recover fully until around 1970.
• Since 1970, world trade as a fraction of world GDP has achieved
unprecedented heights.
– Vertical disintegration of production has contributed to the rise in the value
of world trade through extensive cross-shipping of components.
19. What Do We Trade?
• In 2015, most (about 57%) of the volume of
trade today is in manufactured products
such as automobiles, computers, and
clothing.
• Services such as shipping, insurance, legal
fees, and spending by tourists account for
about 24% of the volume of trade.
• Mineral products (ex., petroleum, coal,
copper) remain an important part of world
trade at 12%
• Agricultural products are a relatively small
part of trade at 8%.
20. What Did We Trade?
In the past, a large fraction of the volume of trade came from agricultural and mineral
products.
• In 1910, Britain mainly imported agricultural and mineral products, while the U.S.
mainly imported and exported agricultural products and mineral products.
• In 2015, manufactured products made up most of the volume of imports and exports
for both countries.
blank Exports of United
Kingdom
Imports of United
Kingdom
Exports of
United States
Imports of
United States
1910 75.4 24.5 47.5 60.7
2015 72.3 73.6 74.8 78.4
Manufactured Goods as a Percent of Merchandise Trade
21. What Do We Trade? – Developing Countries
Over the past 50 years, the exports of developing
countries have shifted toward manufactures.
• In 1960, about 58% of exports from developing
countries were agricultural products and only
12% of exports were manufactured products.
• In 2001, about 65% of exports from developing
countries were manufactured products, and only
10% of exports were agricultural products.
• More than 90 percent of the exports of China, the
largest developing country and a rapidly growing
force in world trade, consist of manufactured
goods.
22. Outsourcing and Offshoring
• Outsourcing (vertical disintegration) is subcontracting a service, such
as product design or manufacturing, to a third-party company.
– Outsourcing can occur within an economy or across countries.
• Offshoring describes the relocation by a company of a business
process from one country to another -- typically an operational
process, such as manufacturing, or supporting processes, such as
accounting.
– Offshoring can be done by the same company or outsourcing to a third- party
company.
23. Service Offshoring
• Service offshoring occurs when a firm that provides services moves
its operations to a foreign location.
– Service offshoring can occur for services that can be transmitted
electronically.
Ex. customer service call centers.
• Service outsourcing is currently not a significant part of trade.
24. Offshoring vs. Non-Tradable
• Some jobs are “tradable” and thus have
the potential to be offshored.
• Most jobs (about 60%) need to be done
close to the customer, making them non-
tradable.
• Estimates based on trade within the United
States suggest that trade in services may
eventually become bigger than trade in
manufactures
25. Limitation of Gravity Model
Although the gravity model with various impediment factors explains a
volume of trade with other countries well, it does not explain a pattern
of trade (what to trade) and gains from trade.
• Why does the U.S. export services? Why do developing countries increasing
export more manufacture goods? Why service offshoring (import services)?
• Why do countries trade? What countries gain from trade?
26. Disclaimer
Please do not copy, modify, or distribute
this presentation
without author’s consent.
This presentation was created and owned
by
Dr. Ryoichi Sakano
North Carolina A&T State University
Disclaimer
Please do not copy, modify, or distribute
this presentation
without author’s consent.
This presentation was created and owned
by
Dr. Ryoichi Sakano
North Carolina A&T State University
Editor's Notes
What are common characteristics of trade partners with the U.S.? First, geographically group them – North America, Asia, and Europe. Next, order them in terms of size of their economies – Chain as #2, Japan as #3, Germany as #4, France as #5, and U.K. as #6
European countries are about in same distance from the U.S. – holding another determinant of trade constant.
List and map of European countries and their GDP: http://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_GDP_(nominal)
$520 billion with Canada and $486 billion with Mexico.
What technological advancement in transportation and communication occured in past?