单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,CHAPTER 2 CLASSICAL TRADE THEORY,The development of Mercantilist thought,David Humes price-specie-flow mechanism,The theory of absolute advantage,The theory of comparative advantage,1 Mercantilism,The school of economic thought that came into existence in Europe during the period from 1500 to 1750.,The political economy of state building.,1.The development of mercantilist thought,(1)Geographical explorations(in the late 15,th,century),Provided new opportunities for trade.,C,olonial systems of the European nation-states established.,Wealth was needed to maintain the system.,Colonialism went hand in hand with the evolving exchange of goods among the European countries themselves.,Nation:cultural entity.,State:political entity.,(2)The collapse of feudal society and the rise of the merchant class,Feudal society:,A state of autarky,a society that did not trade.,Merchants began meeting in the marketplace,.,Travelers began exchanging goods,from faraway places at the waters edge.,TRADE WAS ATTRACTIVE!,The following also contributed to the development,of Mercantilist thought:,Upsurge in,population,Impact of the,Renaissance,on culture,Discovery of,precious metals,in the New World,Changing,religious views,on profits and accumulation,Rise of,nation-states,2.The mercantilist economic system,(1),National wealth,(2),Economic activity:,zero-sum game,.,(One countrys economic gain was at the expense of another),(3),Accumulation of wealth through trade.,Favorable balance of trade,would help to earn gold.,3.Economic policies pursued by the mercantilists,(1),Controlled the use and exchange,of precious metals.,(2),Prohibited the export,of precious metals by individuals,rulers let specie leave the country only out of necessity.,(3)Smugglers of specie were subject to,swift punishment,often death.,(4),Exclusive trading rights,for certain routes or areas were,given to specific companies.,(5)Subsidize exports,restrict imports of consumption goods.,The Dutch East India Trading Company,4.Discussions,While the mercantilists doctrines,seem naive,today,they,undoubtedly,seemed logical,in the period from 1500 to 1750.,Frequent warfare lent (,增添,)credibility to maintaining a,powerful army,and,merchant marine,.,The legitimization and growing importance of saving by the merchant class could easily be extended to,the,behavior by the state,making the,accumulation of precious metals seem equally reasonable,.,2 David Humes Challenge to Mercantilism,Assumptions of price-specie-flow mechanism,M,S,V=PY (,quantity theory of money,),Demand for traded goods is price elastic.,Perfect competition in both product and factor markets.,A gold standard exists.,(,All currencies are pegged to gold and hence to each other,),2.The price-specie-flow mechanism,A logical argument by David Hume against the mercantilist idea,that a nation should strive for a positive balance of trade,or net,exports.,An automatic trade balance adjustment:,Exports Imports(favorable balance of trade).,Gold flow into the country(Amount=Exports-Imports).,Money supply would rise.,Prices of products would rise.,(balance of trade altered till zero),Exports decrease,imports increase.,3 Adam Smiths Theory of Absolute Advantage,Adam Smith published,The Wealth of Nations,in 1776 in London.,Adams two main areas of contribution:,absolute advantage and the division of labor.,Absolute advantage,:,ability to produce the,same products as,others with,fewer labor,hours.,Assumptions of the theory of absolute advantage,(1)Only two countries and two products in the world.,(2)Each country has a fixed endowment of resources.,(3)Factors of production are completely mobile within a country.,(4)Factors of production are completely,im,mobile between,countries.,(5),A labor theory of value,is employed.,(6)The level of technology is fixed for both countries,although,the technology can differ between them.,(7)Costs of production are,constant,.,(8)There is full employment.,(9)The economy is characterized by,perfect competition,.,(10)There is no government imposed obstacles to economic,activity.,(11)Internal and external transportation costs are zero.,2.Challenge to Mercantilism,(1)A nations wealth was reflected in its,productive capacity,.,(ability to produce final goods and services),(2),Specialization,would generate productivity gains.Increased,division and specialization of labor would generate productivity gains.,Conclusion,:A country should,specialize in and export,those goods it,produced more efficiently because absolute labor required,per unit was less than that of the prospective trading,partner.,(3),Free environment,.,Growth in productive capacity was fostered,best in an environment where people were free to pursue their,own interests.A government policy of,laissez faire,would best,provide the environment for increasing a nations wealth.,(,laissez faire,lei,seifer,:allowing individuals to pursue their own activities within the bounds of law and order and respect for