Since the economic crisis began in late 2008, national leaders have regularly vowed to avoid protectionist pressures and maintain current trade liberalization commitments made under the World Trade Organization (WTO) and individual free trade agreements. However, at the same time, countries have raised barriers to trade in a variety of subtle ways. For example, the United States revoked a promise to maintain a program allowing Mexican trucks to enter the United States under the North American Free Trade Agreement (NAFTA), it included “Buy American” provisions it its economic stimulus package, it initiated a special safeguards action against Chinese tire imports, and it brought a case against China at the WTO. Although many of these actions are legal and allowable under U.S. international commitments, they are nevertheless irritating to U.S. trading partners and indicative of the rising pressure to implement policies favorable to domestic businesses and workers. Most other countries have taken similar, albeit subtle, protectionist actions as well.
exchange in the open market or the costs of organiz- ing in another firm” (Coase, 1937). Williamson fur- ther developed transaction cost economics by “mov- ing beyond the agency theory tradition of ex ante incentive alignment” to the “ex post stage of the con- tract” that aligns transaction types with appropri- ate governance structures, and where all incentives are ultimately shaped (Williamson, 2000). William- son’s contributions emphasized the different forms of governance structures – markets or firms – that would arise under different market conditions. For example, the degree to which assets are redeploy- able and contracts are long-term or incomplete has a direct influence on the type of governance structure that will render the most efficient outcome (Riordan and Williamson, 1985; Williamson, 2000, 2002). Asset specificity (Doeringer and Piore, 1971) has become an important construct and is useful for describing and predicting how firms arrive at a decision to ei- ther make or buy. When there is a high degree of as- set specific city then those assets will likely be gov- erned by a hierarchy such as a firm. Transaction cost economics has moved economic thinking forward in several ways but three are important for the devel- opment of a Theory of Entrepreneurial Policy Align- ment. First, TCE focused attention on the institution rather than the spontaneous coordination of rational individuals as the basic unit of economic analysis. Second, it indicated that different empirical contexts require different economic institutions; markets are efficient for transactions that are simple, complete and short-term while firms are efficient when con- tracts are relatively complex and incomplete over long time horizons (Williamson, 2000). Third, TCE emphasized the need to look at more than one firm at a time, and to consider the nature of inter-firm relationships as well as transactions among them. This has been true of the TCE approach from the beginning. According to Coase (1998), “[w]e cannot confine our analysis to a single firm,” instead “[w] hat we are dealing with is a complex interrelated structure.”
Conquer and rule of fundamentalism jus- tice discourse were followed practical conse- quences, real and observable behavior. Adop- tion and follow-up of breaker foundation strategy against international order and sys- tem, politics of looking to the East, Latin America-oriented, use symbolism, movement of Non-Alignment, support of liberation movements especially Palestinians, are the samples of changing orientation of foreign policy of Islamic Republic during the rule of ninth government.( Dehghani Firoozabadi, 1386: 93-94). It seems that foreign policy of Ahmadinejad government is different from his before and after government. Therefore, it should be equipped to an appropriate theoret- ical framework for the analysis of foreign policy of that government. Perhaps it could be provided more detailed and objective analysis from foreign policy of Islamic Re- public of Iran during Ahmadinejad govern- ment according to the critical theory of inter- national relations. Because this theory is done, internal criticism of political structures and denoted its internal strengths and weak- nesses. Therefore, the main question of the article is: How can analyze foreign policy of Ahmadinejad, according to the critical theory of international relations. It is assumed the critical theory of international relations has the ability and feature for foreign policy of Ahmadinejad. It seems that foreign policy of Ahmadinejad government criticized unjust and hegemonic structure of international sys- tem. Therefore it can be said, in negative form (what should not be), foreign policy of Ahmadinejad government is so matched with critical theory of international relations. In contrast, the critical theory wants to rebuild international system based on modern ration-
13 on the basis of observed choices in market settings, and to treat any subjective data as suspect due to the incomparability and inconsistency of individual responses (Samuelson, 1938). However, powerful theoretical and practical reasons have been advocated in favour of eliciting subjective evaluations of expectations and events by survey respondents. It is argued that due to the unobservability of counterfactual outcomes, researchers often act with partial information. Therefore, observed choices may be consistent with many alternative specifications of preferences and expectations. It is therefore likely that revealed preferences do not necessarily conform to the rational expectations hypothesis of axiomatic expected utility theory (Manski, 2004, p. 1330). Indeed, behavioural research (described in detail in Section 4.1. below) emphasizes that informational biases, cognitive inadequacies, impulsive behaviour and time inconsistency are underlying human traits that may drive a wedge between intended welfare and actual market choices (Thaler and Sunstein, 2008). On this basis, the revealed utility concept is argued to be inadequate for the purposes of public policy evaluation as it essentially assumes the optimality of individual behaviour (Kahneman et al., 1997). In addition, WTP estimates allow the assessment of the relative efficacy of various health and safety interventions that entail non-marginal risk changes, as opposed to hedonic estimates which focus on risk decisions at the margin. On a practical level, the need to employ stated choice data is also spurred by the unavailability of necessary information for evaluating non-market goods, such as natural resources (Hanley, 1989; Adamowicz et al. 1994; Hanley et al., 2001) and health care (Ryan and Farrar, 2000). Empirical estimation of stated choice models is encouraged further by the significant number of studies over the last thirty years indicating that “practically speaking, stated and revealed preferences seem to match up surprising we ll in different choice contexts, cultures and time periods” ( Louviere et al., 2000, p. 12).
The analysis of trade imbalances is further complicated by the fact that not all financial flows are debt obligations or IOUs (i.e., I owe you). In the previous stories, we assumed that all financial account transactions corresponded to international lending or borrowing. In actuality, many international asset transactions involve sales or purchases of productive assets. For example, if a foreigner purchases shares of Microsoft stock in the U.S. market, the transaction would be recorded as a credit entry on the financial account and would add to a financial account surplus. However, in this case we could not claim that someone in the United States borrowed money from the rest of the world because there is no obligation to repay principal and interest in the future. Instead the foreign purchaser of the U.S. asset has purchased an ownership claim in a U.S. corporation that entitles him to the future stream of dividends plus capital gains if he sells the stock later at a higher price. If the company is profitable in the future, then the investors will earn a positive return. However, if the company suffers economic losses in the future, then the dividends may be discontinued and the stock’s price may fall. Alternatively, the U.S. dollar could experience a significant depreciation. The end result could be losses for the foreign investor and a negative rate of return. In either case the foreign investor is not “entitled” to a return of his original investment or any additional return beyond. This same type of relationship arises for international real estate transactions and for foreign direct investment, which occurs when a foreign firm substantially owns and operates a company in another country.
The roots of the messaging around quality in the international education strategy are bureaucratic. Within Australia's education system, the word “quality” tends to be used in association with regulation and minimum (quality) standards. This is especially the case in public policy contexts. When government officials highlight “quality” in education, they are typically talking about “quality assurance” as a synonym for “regulation.” This association is apparent in the policy documentation—although written to be outward-facing, it had to speak to domestic sectoral interests, in particular universities. The NSIE dedicates its first “Pillar” of goals and actions to “Strengthening the Fundamentals,” and highlights the setting of nationally consistent approaches in government’s policy settings, mandatory transparency of provider information, strong quality assurance systems, and strong student protection (NSIE 2016, 13-17). In the AIE2025 “Game-changers” section, “maintaining an Australian edge” is linked to “quality assurance arrangements” (AIE2025 2016, 11). This inward, bureaucratic focus is striking for its failure to proceed from a consideration of the target audience of the strategy: namely, international students. Even the appointment of Australia’s first ever Minister for International Education was dominated by regulatory language, with Richard Colbeck declaring it “quite exciting… to provide effective quality assurance and regulation; that is important in students understanding of the quality of the institution that they are going to choose” (Colbeck 2016).
But what is the impact of trade liberalization on the environment is a matter of debate. Two conflicting hypotheses have emerged from the debate. First one is pollution haven hypothesis (PHH). This hypothesis suggests that the developed countries impose tougher environmental policies than do the developing countries, which results in distortion of existing patterns of comparative advantage. So the polluting industries shift operations from the developed to the developing countries; developing countries thus become ―pollution havens.‖ The second hypothesis, the factor endowment hypothesis (FEH), states that trade liberalization will result in trade patterns consistent with the Heckscher-Ohlin-Vanek (HOV) theory of comparative advantage based on factor endowment differentials. Rich countries are typically well endowed with capital. Since capital-intensive goods are often also pollution-intensive, factor-endowment theories of international trade predict that rich countries specialize in polluting goods. Thus the manifestation of the PHH is in direct conflict with the FEH. This debate is of great concern among economists, environmentalists and world bodies like WTO.
– A target function of any government is to promote the welfare of its popula- tion. As I mentioned before, immigration has a high potential for the economy and the society. Policy has to make use of this potential for the benefit of the citizens already living here. The opening of the labour market increases com- petition for the jobs available. Employees do not like competition in their field. On the other hand we know that competition is one of the best mechanisms to achieve progress in economy and society. People will accept immigration and increased competition if they realize that they can also benefit from the advantages.
Future prospects for trade liberalization versus trade protections are quite likely to depend on the length and severity of the present economic crisis. If the crisis abates soon, trade liberalization may return to its past prominence. However, if the crisis continues for several more years and if unemployment rates remain much higher than usual for an extended time, then demands for more trade protection may increase significantly. Economic crises have proved in the past to be a major contributor to high levels of protection. Indeed, as was mentioned previously, there is keen awareness today that the world may stumble into the trade policy mistakes of the Great Depression. Much of the trade liberalization that has occurred since then can be traced to the desire to reverse the effects of the Smoot-Hawley Tariff Act of 1930. Thus to better understand the current references to our past history, the story of the Great Depression is told next.
This framework, along with the general equilibrium models, demonstrates the theoretical importance of both the composition effect and the growth effect in accounting for external adjustments. Yet, the Kraay and Ventura (2000) theory put forth “ the growth effect ” as the source of long-run current account movements. Other theories of the current account, albeit not based on portfolio choice models, such as Blanchard et al. (2005), Caballero et al. (2008), essentially posit that the “ composition effect ” is the main driver of current account movements. These three different views of the current account naturally call for an empirical investigation on which factor, if not both, is more quantita- tively relevant. While there is still a dearth in the empirical assessment of these portfolio choice models, the closest related empirical work is that of Kraay and Ventura (2000, 2003). Based on their view that portfolio shares are ﬁ xed in the long run and current account changes are brought about by changes in wealth, they run a “ﬁ xed-portfolio ” regression to test the theory, and ﬁ nd overwhelming support for the growth-effect theory. 5 Consequentially, it appears that the growth effect
Throughout this book, we will emphasize the measurement and interpretation of economic data. Understanding how to read charts and tables of economic data is a critical skill for anyone who wants to be a sophisticated consumer of economic and political news. We also explain both policy tools and their links to economic outcomes. Understanding these links requires a model of the economy. We introduce models as needed, in the context of their applications. Mastering macroeconomics involves both understanding the tools that macroeconomists use and knowing how and when those tools should be applied. In this book, you will learn about these tools by example: you will see them in use as we study different questions in economics. At the same time, you will learn about many topics that should interest you as engaged and aware citizens of the world. We hope that, after reading this book, you will both better understand what it is that economists do and be better informed about the world in which we all live. As you proceed through the chapters, you will often see reference to our toolkit. This is a collection of some of the most important tools that we use over and over in different chapters. Each tool is fully introduced somewhere in the book, but you can also use the toolkit as a reference when working through different chapters. In addition, it can serve as a study aid when you are preparing for quizzes and
12 Agreement that became operative in the late 1980s. Then, in the early 1990s, we enlisted Alan Deardorff to work with us in applying the model to analysis of the North American Free Trade Agreement (NAFTA) that was being negotiated. We were commissioned by the U.S. National Commission on Employment Policy to use the model to analyze the economic effects of NAFTA and to calculate the size and patterns of U.S. employment disruption and wage losses, and the budgetary implications of adjustment assistance for displaced workers. Once again, our modeling results suggested small absolute and relative changes in U.S. trade and employment and small budgetary needs for adjustment assistance. Our results were thus a far cry from the “giant sucking sound” that Ross Perot was predicting about NAFTA during the 1992 presidential campaign.
ECON 435H Public Finance: Theory and Policy - Honors 3.0 Fa/Spr Prerequisites: ECON 301, acceptance into the Honors in the Major Program. Emphasizes fiscal functions (e.g., resource allocation and income distribu- tion rather than fiscal institutions, rationale for the existence of the public sector treated both historically and theoretically, taxing and expenditure policies and procedures, with applied research on current topics. Honors students enrolled in this class are held to more rigorous standards and expectations in both reading and writing assignments than students in ECON 435. (020736)
Subsidies (including direct payments and tax credits) are, in contrast, very popular both socially and politically. This may explain their extended use for ECE policies, particularly in the promotion of sales of efficient appliances. And they may be more effective for the adoption of energy-efficient technologies. In this sense, Jaffe and Stavins (1995) found that investment subsidies were three times more effective than an equivalent price increase (or, as the authors put it, that the impact of up-front technology costs was much greater than that of the longer term energy prices). Their explanation for these results was basically possible shortcomings of their modelling, particularly the expectation of future prices. Hassett and Metcalf (1995) also found evidence that tax credits for ECE investments were up to eight times more effective than an equivalent price increase. They explain their results based on uncertainty (about future prices) and information effects (the expectations of a subsidies programme being started shortly). However, an additional explanation for this behaviour, related to the uncertainty issue, may be prospect theory (Kahneman and Tversky, 1979): under uncertainty, people prefer to avoid losses than to acquire gains. Given that an investment in energy-efficient equipment is a certain loss with uncertain gains (those resulting from avoiding higher and uncertain energy prices), reducing the loss through subsidies may be more effective than reducing the gains. However, subsidies allow (and certainly favour) the rebound effect by reducing the effective price of energy, and also promote free-riding. Therefore, their final effectiveness and efficiency are much compromised, in spite of their apparent success under simple assessments. This has been apparently the case with utilities’ subsidies programmes, one of the major vehicles for ECE promotion. Joskow and Marron (1992) or Loughran and Kulick (2004) found that reductions were lower than expected and costs higher than utilities’ estimates (although Aufhammer et al. (2008) revised Loughran and Kulick’s data and found that the utilities results could not be rejected).
CCPs essentially provide protection against default, using a variety of mechanisms. Like other providers of protection, CCPs do not make risk disappear: they reallocate it. Moreover, this reallocation of risk can improve welfare by shifting risk from those who bear it at a high cost (e.g., a hedger who could be wiped out if its counterparty were to default) to those that bear it at a lower cost. Crucially, however, it must be remembered that protection mechanisms have costs arising from information and incentive problems, and clearing of derivatives trades via CCPs is no exception. Good policy should recognize these potential problems, and make appropriate accommodations to them. This issue is discussed further in Section V below.
The course unit focuses on the international aspects of economics. We will discuss issues in four major parts. Part One is about Trade Theory – we will seek an answer to the question: Why do nations trade? One of the outcomes of this part will be that the most beneficial way of trading is free trade. We will end this part with international factor movements – with an emphasis on foreign direct investments. Part Two, the part on Trade Policy will answer the following astonishing question: if free trade is beneficial, then: Why do nations restrict trade? We will also talk about international trade rules and the World Trade Organisation (WTO). Part Three will introduce you to the exciting world of International Finances. You will learn the difference between a trade balance and the balance of payments, and you will also understand what determines the price of 1 Euro in US dollars (that is the EUR/USD exchange rate) and we will discuss also reasons for the changes of exchange rates. By the time we finish the semester you will have an overview of the international monetary system and its institutions. With Part Four the course finishes with an overview of globalisation and the major players of the international economic system.
This paper is related to several strands of the literature. Our framework is similar to the one Conesa and Krueger (1999) use to study the aggregate effects of Social Security reforms. Their model has two essential features for our analysis. First, it takes a life cycle perspective on consumption, assets, and labor decisions. Second, it accounts for general equilibrium feedback effects. We extend their model by incorporating idiosyncratic risk to health and by allowing consumers to enroll in private and public health insurance programs. We build on the literature that uses overlapping generations models to study the macroe- conomic effects of health and aging. Attanasio et al. (2010) study the implications of an aging population for the financing of Medicare, but they do not explicitly model Medicaid, a program that we show is essential to determine consumers’ saving and insurance behavior upon changes to Medicare. Pashchenko and Porapakkarm (2013) study the welfare effects of the Patient Protection and Affordable Care Act (ACA). Our model is closely related to theirs, except that we endogenize the retirement decision, since 20 percent of the population aged 65 and older are still active in the labor market. Jung and Tran (2016) use a model with endogenous health to quantify the effects of ACA. They do not, however, study tran- sitional dynamics. Conesa and Krueger (1999) and Krueger and Ludwig (2016) argue that a full characterization of the transition path is crucial for policy evaluation. Comparative statics exercises fail to account for potentially large transitional costs, and hence give at best a partial picture of the effects of policy reforms. Bairoliya et al. (2017) and İmrohoroğlu and Zhao (2017) develop overlapping generations models to study health insurance and social security reforms in China. McGrattan and Prescott (2017) propose an overlapping generations model to study the impacts of fiscal policies in economies that are undergoing a demographic change. Lastly, Borella et al. (2017) examine the importance of including gender and marriage in structural life cycle models.
One of the most prominent challenges facing low-income workers in a modern, global labor market, is how labor will adjust to a rapidly changing and increasingly automated economy. Trade-impacted workers have received a large share of this attention, which became particularly visible as a policy issue during the 2016 Presidential Election. While low-income households have benefited tremendously from trade in terms of lower costs of goods, higher variety, and quality of life improvements associated with technological advancement, recent evidence suggests that they have also been persistently negatively affected in terms of earnings and employment outcomes. Despite growing evidence that trade’s disperse benefits also come with concentrated costs, little is known about policy efforts that deliberately target the adjustment process for those most affected by regionally and industrially shocked labor markets. Credible empirical estimates are made difficult by both a lack of detailed worker-level data and confounding factors correlated with qualifying for adjustment programs—selection biases which generally preclude reliable estimates.
from the influential DICE framework of Nordhaus (2008). First, the ANEMI model includes an explicit energy sector which produces a composite energy good used in the production of final output. This energy intermediate good is in turn produced using a composite of two broad energy sub-composites: heat energy (i.e. fuel energy burned for transportation or industrial purposes) and electrical energy. Each of these energy types is produced using different tech- nologies for each of the major energy sources. This structure provides a useful mid-point between aggregate models (such as DICE) which abstract from de- tailed modeling of energy and more detailed bottom up models which typically abstract from key features of dynamics and optimal choice. The second inno- vation on the climate side is the inclusion of a simple production structure for fossil fuels. As a result, the path of fossil fuels evolves endogenously in the model, so that climate policy (such as carbon taxes which seek to lower de- mand for fossil fuels) and the negative impact of climate change on aggregate productivity (which tends to lower energy demand) both impact the temporal path of fossil fuel prices. In turn, the equilibrium prices of fossil fuels impact investment in capital stocks to produce energy using different types of fossil fuels.
trading state cannot be explained as the response to public information. This is consistent with a market where informed traders are taking positions in advance of the meeting end based upon their expectations of the outcome. Finally, Ehrmann and Fratzscher (2007) undertake an EGARCH study of Federal Reserve, BoE and ECB monetary policy announcements and broader statements regarding economic outlook using daily data over sample periods that begin in 1997 for the BoE, and 1999 for both the Federal Reserve and ECB; all sample periods run until 2004. Although evidence for exchange rates is mixed, Ehrmann and Fratzscher do conclude that policy announce- ments by all three central banks exert a significant impact upon the volatility of interest rates. In addition, the impact of BoE policy announcements is significantly larger than either the Federal Reserve or ECB. This second find- ing is consistent with the authors’ hypothesis that the BoE combination of collegial communication strategy and individualistic voting strategy leads to more regular and significant policy announcement shocks than for either the Fed or ECB. The volatility impact of broader statements on economic outlook is only significant in the case of the Federal Reserve.