Macroéconomie Ouverte : Commerce Extérieur

These flashcards cover key concepts related to international trade and the open economy, focusing on exports, imports, exchange rates, and economic growth.

What is the equation representing the equilibrium of a country's economy with respect to international trade?

Y + M = C + I + G + X

What factors influence the function of exports (X)?

Exports depend on exogenous variables such as the world's income (Y∗) and the real exchange rate (ε).

What happens to exports when the world's income (Y∗) increases?

If Y∗ increases, the purchasing power of trading partners increases, leading to higher imports including our products.

How is the real exchange rate (ε) calculated?

ε = e · P / P∗ where e is the nominal exchange rate, P is domestic price, and P∗ is foreign price.

What does a rise in the real exchange rate (ε) indicate?

A rise in ε indicates a real appreciation, leading to a loss of competitiveness.

How do imports (M) relate to national income and relative prices?

Imports are a function of national income and relative prices: M = f(Y, ε).

What is the marginal propensity to import (m)?

The marginal propensity to import is defined as m = ∂M/∂Y.

What is the Marshall-Lerner condition?

For a depreciation to improve the trade balance, it is necessary that η + ψ > 1.

What does the J-Curve illustrate in terms of trade balance after devaluation?

The J-Curve shows an initial deterioration in the trade balance due to price effects, followed by eventual improvement through volume effects.

What are the two primary strategies for overcoming the external constraint on economic growth?

1. Import substitution to reduce π; 2. Upgrading quality to enhance ϕ.

Why might a devaluation not effectively improve the trade balance?

If the devaluation leads to inflation, the price of imports may rise, offsetting any benefits of the lower exchange rate.

What is the implication of the Thirlwall's Law for economic growth?

A country’s growth is constrained by its ability to export and its dependency on imports; a high dependency with low export capability leads to slower growth.