Some International Economics Basics
Or, How to Read All those International Economic Statistics That You See Everywhere

Comparative Advantage
    •Absolute advantage
        -Wool and wine
    •Comparative advantage
        -David Ricardo
        -Widgets and Thingamajigs

Comparative Advantage, Pt. 2
    •Factor endowments
        -Land, labor, and capital
    •Comparative advantage works with prices, but also with quality and availability
    •Works with goods, services, and finances
    •Two things to keep in mind
        -The difference between aggregate gain and distribution
        -The difference between individuals as producers and individuals as consumers

National Accounts
    •National expenditure accounts
        - http://www.bea.gov/bea/dn/nipaweb/TableView.asp?SelectedTable=5&FirstYear=2004&LastYear=2005&Freq=Qtr
    •National income accounts
        - http://www.bea.gov/bea/dn/nipaweb/TableView.asp?SelectedTable=53&FirstYear=2004&LastYear=2005&Freq=Qtr
    •How accurate are these figures?
        - http://www.bea.gov/bea/dn/nipaweb/TableView.asp?SelectedTable=43&FirstYear=2004&LastYear=2005&Freq=Qtr

Comparing National Accounts
    •The IMF and international standards
    •The exchange rate method vs. the purchasing power parity (PPP) method
        - http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNIPC.pdf

Balance of Payments
    •Current account
        -Goods, services, and income
    •Capital and financial accounts
        -Investment
    •The two are equal by definition
        -But there’s always an error term

Balance of Payments, Pt. 2
    •Effects of current accounts imbalances
        -Wealth effects
        -Financial/monetary effects
    •The 4-5% deficit threshold
    •The US current accounts position
        -The rise in current account deficit
        -The effect on the US international investment position

Exchange Rates and Trade
    •Two sources of exchange rate movements:  Current demand and expectations
        -Demand comes from trade and investment
    •Benefits of lower rates:  higher exports, better BOP situation
        -Except when trade is inelastic
    •Costs of lower rates:
        -More expensive imports
    •Inflation
        -Debt servicing