Critically examine the trends in global external imbalances over the past 20 years.: Economics Assignment, UCC, Ireland
| University | University College Cork (UCC) |
| Subject | Economics |
There are 3 questions.
1. Critically examine the trends in global external imbalances over the past 20 years. A significant part of your report should be devoted to analysing the external adjustment phase during the global crisis
2. Consider a world in which there are two countries, home and foreign. There are two industries in each country, a durable goods industry and a non-durable goods industry. Both goods use capital and labour in production. However, durables are relatively labour intensive in production while non-durables are relatively capital intensive in production.
Aggregate capital and labour resources in both countries are in fixed supply. Home’s aggregate capital stock is less than that in Foreign. Both countries have the same population and labour force sizes.
a) What are the main assumptions of the Heckscher-Ohlin model of trade? Comment on the validity of the assumptions.
b)With the aid of graphs, examine in detail the pattern of trade between Home and Foreign predicted by the Heckscher-Ohlin model as both countries move from a state of autarky to a rate of free trade.
c) Using your results, analyse the effects of trade on wages and rentals on both Home and Foreign. Employ graphs where necessary.
3. Discuss the Ricardian model of trade using illustrations. Does the notion of absolute advantage have any role to play in this classical trade model?
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