Patched formula (updated for PPT):
[
F = S \times \frac1 + i_d1 + i_f
]
Where F = forward rate, S = spot rate, i_d = domestic interest rate, i_f = foreign interest rate.
1. Introduction to International Trade
2. The Classical Trade Theories (The Foundation) dominick salvatore international economics ppt patched
Relative Commodity Prices: Determined by the intersection of relative demand and supply.
3. Modern Trade Theories (The Standard Model)
Factor Price Equalization: Tendency for trade to equalize factor prices (wages, rent) across countries.
The Leontief Paradox: The empirical contradiction where the US (capital-abundant) exported labor-intensive goods, challenging the H-O model.
4. New Trade Theories (Imperfect Competition) Patched formula (updated for PPT): [ F =
5. International Trade Policy
Non-Tariff Barriers (NTBs): Quotas, Voluntary Export Restraints (VERs), and technical barriers.
Strategic Trade Policy: Government intervention to help domestic firms gain a first-mover advantage in global oligopolies.
Trade Blocs: Customs Unions vs. Free Trade Areas (Trade creation vs. Trade diversion).
6. The Balance of Payments & Foreign Exchange Relative Commodity Prices: Determined by the intersection of
7. Open Economy Macroeconomics
Price Adjustment Mechanisms: The Gold Standard (Hume’s Price-Specie Flow Mechanism) vs. Modern automatic adjustment.
Salvatore’s textbook is famously divided into two distinct parts: Trade Theory (Microeconomics) and International Finance (Macroeconomics).