A Theory of International Trade Under UncertaintyA Theory of International Trade Under Uncertainty analyzes international trade in goods and securities in the presence of uncertainty using an integrated general equilibrium framework that recognizes the dependence of markets for goods on financial markets and vice versa. The usefulness of this approach is demonstrated by means of applications to questions such as the effects of international trade on resource allocation, tariff policy, and intervention in financial capital markets. Results which are important for theoretical as well as policy oriented applications are presented. Comprised of 11 chapters, this volume begins with an introduction to some of the fundamental elements of the deterministic Ricardian and Heckscher-Ohlin theories of international trade. Relevant elements from the theory of decision making under uncertainty are then discussed, along with the behavior of firms and consumers-investors in an economy with stock markets. Subsequent chapters focus on problems of commercial policy; gains from trade in goods and securities; and issues of intervention in financial capital markets. The book concludes by describing a dynamic model of international trade that contains an infinite horizon and takes into account the trade-off between present period consumption and savings. An example that illustrates an equilibrium structure of the dynamic model is presented. This monograph is intended for economists who are interested in international trade or international finance, including graduate students who specialize in these fields. |
Contents
| 1 | |
| 5 | |
Chapter 3 Elements of the Theory of Economic Decision Making under Uncertainty | 27 |
Chapter 4 A Critical Survey of the Literature | 43 |
Chapter 5 A Stock Market Economy | 63 |
Chapter 6 A Diagrammatic Exposition of Stock Market Equilibrium and the Balance of Payments | 79 |
Chapter 7 The Basic Propositions of the Pure Theory of International Trade Revised | 93 |
Chapter 8 Commercial Policy | 109 |
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Common terms and phrases
allocation assets assets—indifference curve assume autarky budget line Chapter choose commodity markets commodity trade concave confiscation consumption decision problem depends deterministic domestic economy equilibrium relative price equity of type expected utility level export factor endowments factor prices factor-price equalization factors of production firm foreign country given Heckscher–Ohlin theory Hence home country implies imports increase indifference curve indirect utility function input international trade investors Kemp labor marginal rate marginal utility market clearing maximize numeraire optimal portfolio output portfolio composition portfolio point posttariff preferences pretariff pretrade price of type-2 price ratio problem production point random real equity prices real-equity price represents Ricardian risk aversion Rybczynski theorem second commodity sector slope state-2 stock market equilibrium substitution tariff proceeds tariff rate technologies terms of trade theory of international trade in commodities trade in equities trade in securities transformation curve type-2 real equities units utility of income welfare zero