Barriers to Trade
This is a tax on imported goods
What is a tariff?
A trade bloc with zero internal tariff and a common external tariff
What is a customs union?
when a country cannot repay the loan given by a financial institution
What is a sovereign debt crisis?
This is measured by an inflow of funds - outflow of funds
capital account
Path dependency of a variable
What is hysteresis?
an MNC locating in a country in the EU to be able to ship to other EU countries is an example of this
What is tariff jumping?
When the creation of a customs union leads to trade with a more efficient producer
This model tries to increase economic growth by increasing aggregate demand
This is the way that all governments borrow
What are issuing bonds?
when a country buys bonds to stimulate the economy through low interest rates
What is quantitative easing?
In this form of Brexit, the UK still has access to the European market through paying an annual fee, but does not have to adhere to EU law.
What is Soft Brexit?
When the creation of a customs union leads trade with a less efficient producer
What is trade diversion
What is a horizontal MNC?
current account theory that emphasizes that the growth of prices (inflation) becomes growth of exchange rate
Rapid investment in a currency in the short term, typically when there are higher interest rates
What is hot money?
This model explains the effects of a customs union on efficiency
What is the Vinerian Model?
This EEC policy reduced non-tariff barriers and allowed for free movement of goods, services, and labor
what is the Single European Market?
This takes place when an economic event affects two economies differently
What is an asymmetric shock?
current account is made up of private and public sector that move together in surplus and deficit
What is twin deficit argument?
X - M = (S - I) + (T - G)
Under the Maastricht criteria, this was limited to 3% of GDP.
What is the deficit-GDP ratio?
A negative _____________ occurs when domestic production decreases following a tariff.
What is effective rate of protection?
What is near shoring?
A group of countries where efficiency would be maximized by sharing a common currency
What is the optimum currency area?
This model states that uncovered interest rate parity holds in the short run while absolute PPP holds in the long run
What is Dornbusch's Overshooting Model?
Δln