Trade Patterns (15 points; 10 min.): (a) How are the pattern…
Trade Patterns (15 points; 10 min.): (a) How are the patterns of international trade, that is the pattern of what different countries export and import, explained? (Please discuss at least three determinants of trade, at length).(b) Two basic models of international trade are the simple trade “openness” model and the gravity model. Please write the equations that represent both models, discuss what information they provide, and discuss how the models differ, and, importantly, what determinants of trade each might overlook. (Note: when writing equations, use numbers in place of subscripts, and be sure to use brackets or parentheses to group variables according to order of operation. For example, if I wanted to show the aggregate of GDP for Country 1 and GDP for Country 2, all divided by X, I would write the equation in the following way: [GDP1 + GDP2] / X, so that the reader would know that the GDPs must be added to each other before dividing by X).
Read Details