Reference no: EM132261670

INTERNATIONAL TRADE ASSIGNMENT -

Answer the questions - Follow the instructions below on how to get the data.

Q1. Using trade flows in your data, calculate openness as a percentage for Italy and Sweden and present them for each year for both countries as a table. Explain how you calculated openness using trade flows, i.e., write down the formula. Suggest an alternative way to calculate openness other than using trade flows.

Q2. Using the calculations you did for openness in Question 1, plot openness (as a percentage) against time (2003-2015) for both countries (Italy and Sweden) in a single graph. Put openness (as a percentage) on the vertical axis and time on the horizontal axis. Explain and compare briefly how openness changes for these countries over time. Make sure you limit your explanation to 200 words.

Q3. Explain in up to 200 words the relationship between openness and economic development by calculating the correlation coefficient between GDP per capita (proxy for economic development) and openness for each of the two countries, respectively. [Here you have to use the CORREL command in Excel]. DO NOT ATTACH YOUR DATA TO THE ASSIGNMENT.

Q4. Consider the following model of trade between Australia and Singapore. Assume throughout that those two countries are the only two countries in the world, at least for purposes of trade. There are two goods: shoes and calculators. Consumers in both countries always spend half of their income on shoes and half of their income on calculators. The only factor of production is labour. Each Australian worker can produce 1 shoe or 2 calculators per unit of time. Each Singaporean worker can produce 4 shoes or 2 calculators per unit of time. There are 80 workers in Australia and 60 workers in Singapore.

(a) Which country has an absolute advantage in shoes? In calculators?

(b) Which country has a comparative advantage in shoes? In calculators?

(c) Draw the production possibility frontier for each country and indicate slope (put shoes on the vertical axis and calculators on the horizontal axis).

(e) Find the autarky relative price of calculators in both countries (i.e., the price of calculators divided by the price of shoes).

(f) What is the optimal consumption and production for each country under autarky?

To answer the questions 1, 2 and 3, first get the data and follow these steps. Notice that World Bank regularly updates its data, therefore its crucial to obtain all data as soon as possible.

1. Questions 1, 2 and 3 require you to obtain data for Italy and Sweden.

2. Obtain country-level data on:

I. Imports of goods and services (in current US$)

II. Exports of goods and services (in current US$)

III. GDP (in current US$)

IV. GDP per capita (in current US$)

V. GINI Index (World Bank estimate) from the World Bank's World Development Indicators (World Development Indicators - The World Bank DataBank)

[Note that if your browser (such as Chrome) does not open the webpage, try a different browser (such as Internet Explorer)]

3. For simplicity, use data measured in current US dollars ($) as indicated above.

4. Pick data ranging from 2003 to 2015.

Attachment:- Assignment File.rar