International Economics

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1 Analysis of the effects of trade agreements on bilateral trade flows
By Arslan Tariq · Université d'Orléans

Barnabas Kiiza · Makerere University

Dear Tariq, As far as I know most studies use Dummy Variables to capture the effects of Trade Agreements in the Augmented Gravity Flow models of Bilat... [more]

Dear Tariq, As far as I know most studies use Dummy Variables to capture the effects of Trade Agreements in the Augmented Gravity Flow models of Bilateral Trade. Have you consulted enough Literature on this?? Please look at literature on determinants of Bilateral Trade Flows both for time series and panel data models. The dummy variables are used to capture that time span that the agreement came into force To date; for example it takes a value of 1.0 for the POST-agreement period and for the PRE-agreement period it takes a value of ZERO. I don't know if I have answered your question.

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Open If Ricardo's statement of comparative advantage is simpler than the textbook version, then why do we keep teaching the latter instead of the former?
Ricardo's original comparative advantage is not only simpler, but also more elegant and accurate, and does not rely on questionable assumptions.

Ricardo's original comparative advantage is not only simpler, but also more elegant and accurate, and does not rely on questionable assumptions.

http://www.academia.edu/1948311/Comparative_advantage_and_the_labor_theory_of_value ×
Comparative advantage and the labor theory of value

With the famous numerical example of chapter 7 of the Principles (1817) David Ricardo intended to illustrate first and foremost the new proposition that his labor theory of value does not regulate the price of international transactions when the

By Jorge Morales Meoqui · Wirtschaftsuniversität Wien

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2 How can I measure the Panel VECM (in WinRats or Stata or any other software)?
By Ushan Peiris · Sabaragamuwa University of Sri Lanka

Ushan Peiris · Sabaragamuwa University of Sri Lanka

thanks Vera

thanks Vera

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6 What is the best estimation method to estimate gravity model in international trade?
By Anandita Rizki Septiani · Gadjah Mada University

Anandita Rizki Septiani · Gadjah Mada University

Thank you so much Mr.Thangamani and Mr.Azam. Of course i have to test the data. The estimation method also related to zero value of bilateral trade da... [more]

Thank you so much Mr.Thangamani and Mr.Azam. Of course i have to test the data. The estimation method also related to zero value of bilateral trade data. Some estimation specifically applied to overcome this problem, but others not.

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Open How do I account for capital flight in my model?
I intend to measure the effect of corruption on capital flight in my model but I suspect I may not be able to adequately measure capital flight well.

I intend to measure the effect of corruption on capital flight in my model but I suspect I may not be able to adequately measure capital flight well.

By Olusijibomi Akinnibosun · University of Ibadan

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1 Have we reached a turning point in terms of (economic) growth?
By Henry Barrows

John Ryding · RDQ Economics

I don't believe that the downturn in advanced economy growth rates is permanent but I do believe the pressure to deleverage (from the private sector i... [more]

I don't believe that the downturn in advanced economy growth rates is permanent but I do believe the pressure to deleverage (from the private sector in the U.S.) and to stablize or lower debt-to-GDP for U.S. and Europe will put a crimp in growth for a few more years (I do believe the This Time It's Different thesis by Reinhart & Rogoff is broadly correct). It is my belief that this adjustment process is happening at the same time as the burst from product innovations may be easing up (I am quite Schumpeterian in some of my views on the process of growth though nowhere near as pessimistic as he was). The internet revolution began almost 20 years ago and there is still growth at the margin coming from product cycles (like the upgrade from XP that is the major OS base for business or the expansion into mobile). But the new new thing to boost productivity seems to be absent (btw 20 years is fairly close to the average for such waves in productivity) as evidenced by the slowdown in U.S. productivity rates (GDP growth has average 2 1/4% in the recovery but the U.S. has created 3.5 million jobs and private sector hours worked have risen at nearly 2% per year since the recession trough). Then there is whatever demographic impact comes from the retirment of the baby boomers, which has just begun, and the impact of health and social security for this massive cohort. Maybe clean energy will be the new new thing but I am not optimistic on that score (read Solyndra) unless there is a breakthrough with fusion (but I have been waiting for that since I was a kid in the 1970s). In short, my forecast for the U.S. is 2 1/2% - 3% (at best) growth in the U.S. for the next three years.

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3 Which of the following best explains why a high inflation rate triggers an increase in interest rates?
By Lisebo Ntiso · University of South Africa

John Ryding · RDQ Economics

I don't think this question can be answered in a vacuum in the sense that we need to specify which country we are talking about. For example, the Fed... [more]

I don't think this question can be answered in a vacuum in the sense that we need to specify which country we are talking about. For example, the Federal Reserve and many other central banks operate on an inflation target (typically 2%, which is where the Bank of Japan's 1% target rate will be revised up to), although in the Fed's case, this is complicated by also having an unemployment rate objective. When inflation rises above target, central banks tighten policy and that necessarily involves raising interest rates regardless of the theoretical model the central bank follows (the exceptions to this tend to be dysfunctional central banks--Argentina a couple of years ago advanced the theory that inflation was high because there was not enough production to meet demand and that production was credit constrained so the central bank should be easing, but I think most of us would view this as rather odd reasoning). The work of Professor John Taylor suggests that many central banks have followed a rule that links the policy rate to inflation and economic slack, which earned the name the Taylor Rule. In the form that has been most often used for the U.S. the rule is r = 2 + p + 0.5(p-2) + 0.5(y-y*) where r is the policy rate, p is the inflation rate, p-2 is the deviation from target and y-y* is the GDP gap in %. Note that a Taylor Rule following central bank will adjust the policy rate by 1.5 times the change in the inflation rate. The Fed has moved away from simple Taylor Rules (alas) to increase the emphasis on unemployment (the GDP gap) and plans to keep rates lower for longer than the Taylor Rule would recommend. With rates bounded below by zero and above by the Fed's promise to keep rates on hold until the unemployment rate falls below 6.5% (it is currently 7.8%) or inflation over a 1 to 2 year forecast horizon rises above 2.5%, we are unlikely to see rates in the U.S. respond at all to inflation until the rate rises very significantly (the Fed's Phillips Curve inflation model suggests that it is unlikely to forecast inflation above 2.5% as long as unemployment remains high as it sees NAIRU between 5.2% and 6%).

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Open How to analyse the external debt sustainability of Brazil?
How to analyse the external debt sustainability of Brazil? External debt sustainability of Brazil

How to analyse the external debt sustainability of Brazil? External debt sustainability of Brazil

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5 My country is going to be enrolled in Free Trade Zone with a number of countries.
By Sardor Azam · Westminster International University in Tashkent

Sardor Azam · Westminster International University in Tashkent

Dear Mr. Lopez, thank you for your in depth explanation of what else I can do in my case. That will help me get deeper into this subject area.

Dear Mr. Lopez, thank you for your in depth explanation of what else I can do in my case. That will help me get deeper into this subject area.

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Open Sources of information on the sovereign ratings of Greece from 200 to 2012 in a series:
I need information on the sovereign ratings of Greece from 2000 to 2012 by the major/most important ratings agencies: S&P, Moody's and Fitch. Any sugg... [more]

I need information on the sovereign ratings of Greece from 2000 to 2012 by the major/most important ratings agencies: S&P, Moody's and Fitch. Any suggestions? Where could I find that information in a series?

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International Economics

Comparative advantage and the labor theory of value

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