finance and theories

Part II Core Theory: Classic International Trade Theories

Table of Contents

Part II Core Theory: Classic International Trade Theories.........................2
1. Mercantilism ...........................................................................................2
The Classical World of David Ricardo and Comparative (Chapter 3) .......3
Advantage ...................................................................................................3
Absolute Advantage and Comparative Advantage .....................................5
Problems of Using Absolute Advantage to Guide Allocation of Tasks......8
Ricardian Comparative Advantage .............................................................9
Resource Constraints: ...............................................................................18
Complete Specialization: ..........................................................................20
Technological take over by less developed countries...............................21
Production Possibilities: ...........................................................................21
Complete versus Partial Specialization ....................................................23
The case of a small country ......................................................................24
Some concluding observations .................................................................25
2. Extensions and Tests of the Classical Model of Trade (chapter 4).......26
2.1 The classical model in money terms...................................................27
2.2 Changes in wages and exchange rates ................................................28
2.3 Multiple commodities .........................................................................30
-1-

Part II Core Theory: Classic International Trade Theories
1. Mercantilism and the Transition to Ricardo Theory of International Trade
2. Extensions and Tests of the Classical Model of Trade

1. Mercantilism