Impact of Financial Crisis on International Trade free essay sample

The work described in this paper was substantially supported by a grant from the Research Grant Council of the Hong Kong Special Administrative Region, China (Project no. HKUST6212/00H). 253 254 Zihui Ma and Leonard K. Cheng Forbes (2001) went further to construct some statistics measuring the importance of trade linkages in transmitting crises. Because most economists agree that international trade is one of the important factors in explaining ? nancial crises, it seems natural and logical to ask the reverse question: what are the e? ects of ? nancial crises on international trade? Surprisingly, little research on this subject has been done. Perhaps the reason is that the answer appears to be obvious. Conventional wisdom would predict that a ? nancial crisis, by bringing about a recession in the macroeconomy, would lead to a drop in imports. Exports, however, may rise because of both a decline in domestic demand and a devaluation of the domestic currency. We will write a custom essay sample on Impact of Financial Crisis on International Trade or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page A weakening or collapse of the ? nancial system, in particular the banking system, however, might weaken the country’s export capability. So the aggregate e? ects of a ? nancial crisis on the macroeconomy are unclear. This paper tries to ascertain whether the ambiguity can be resolved empirically. We divide all the past ? nancial crises into two types: banking crises and currency crises. These two di? erent types of crises had di? erent attributes and di? erent e? ects on international trade. This paper begins by analyzing theoretically the e? ects of banking and currency crises on international trade. Then it uses bilateral trade data, macroeconomic data, and geographic data to test the theoretical predictions. Overall, the empirical results provide support for the theoretical predictions. This paper contributes to the literature in two ways. First, it provides a theoretical framework for understanding the impact of ? nancial crises on international trade and the channels of crises transmission through trade. Second, it estimates the e? ects of banking crises and currency crises on imports and exports. The estimated results can be used to predict the impact of ? nancial crises on trade, thus providing useful information for risk management to policymakers. The remainder of the paper is organized as follows. Section 8. 2 reviews previous works on the relationship between international trade and ? ancial crisis. Sections 8. 3 and 8. 4 analyze the e? ects of banking crises and of currency crises on trade, respectively. Section 8. 5 describes the data and methods used to estimate the e? ects of these crises. Section 8. 6 reports the results of empirical estimation and statistical testing. Section 8. 7 concludes. 8. 2 Literature Review: Trade and Financial Crises Economists pay attention to the role played by trade in ? nancial crises for two reasons. First, trade imbalance has been shown to be one of the important factors that trigger ? nancial crises. Current de? cits may decrease foreign reserves. As Krugman (1979) pointed out, a currency crisis is more likely to happen in an economy that does not have enough foreign reserves. The E? ects of Financial Crises on International Trade 255 Second, ? nancial crises may be transmitted through trade linkages from an a? ected country to others despite the latter’s relatively good fundamentals. In explaining such contagion e? ects, economists have tried to identify the channels through which contagion was spread. As trade is the most obvious economic linkage between countries, much research has been devoted to this connection. While the importance of trade imbalance in triggering crises is widely accepted, there is no agreement on the importance of trade in transmitting ? nancial crises. Eichengreen and Rose (1999) used a binary-probit model to test whether bilateral trade linkages transmitted crises between industrial countries between 1959 and 1993. They found that the probability of a ? nancial crisis occurring in a country increased signi? cantly if the country had high bilateral trade linkages with countries in crises. They concluded that trade was an important factor. Glick and Rose (1999) conducted a similar analysis with more countries between 1971 and 1997 and obtained a similar result. Forbes (2000) used a company’s stock market data to study the importance of trade in ? nancial crises transmission, and his result also showed that trade played an important role. However, other papers have provided di? erent answers to the problem. For instance, Baig and Goldfajn (1998) thought that trade linkage was unimportant in the East Asian Crisis because the direct bilateral trade volumes between these economies were very small. Masson (1998), analyzing the Mexican crisis and the Asian crisis, obtained similar results. All the papers that analyzed the relationship between trade and ? nancial crises ignored the reverse question: how did ? nancial crises a? ect international trade? We argue that the e? ects of ? nancial crises on trade are a precondition for discussing whether trade transmits crises. If ? nancial crises do not a? ect countries’ imports and exports at all, how can ? nancial crises be transmitted through the trade channel? So before we analyze the importance of trade in transmitting ? ancial crises, we need to clarify the e? ects of ? nancial crises on international trade. As pointed out previously, little work has been done on this topic to date. It seems there is a belief that ? nancial crises only a? ect countries’ imports and exports through changes in the exchange rates. Because the e? ects of exchange rates have already been thoroughly analyzed before, it may seem that there is no need to study the question. However, this view may not be correct. A devaluation of a national currency will increase the volume of exports and reduce the volume of imports. Classic international trade theory shows that a devaluation improves the trade balance if the Marshall-Lerner condition is satis? ed. Because in a ? nancial crisis a country usually experienced a devaluation of its national currency, the same analysis would apply, that is, the a? ected countries’ imports will decrease, but their exports will increase after the crises. Furthermore, ? nancial crises (including currency crises, banking crises, 256 Zihui Ma and Leonard K. Cheng or both) could also a? ect trade through channels besides the exchange rate. Calvo and Reinhart (1999) pointed out that ? nancial crises usually caused capital account reversal (sudden stop) and triggered an economic recession. Mendoza (2001) showed that in an economy with imperfect credit markets these sudden stops could be an equilibrium outcome. The economic recession reduces not only domestic demand but also total output and export capability, whereas capital out? ow forces the country to increase export. Thus, whether exports increase or decrease after ? nancial crises is unclear without further analysis. Before we analyze how ? nancial crises a? ct the crisis countries’ imports and exports, let us ? rst de? ne ? nancial crises. Eichengreen and Bordo (2002) have provided de? nitions of currency crises and banking crises: For an episode to qualify as a currency crisis, we must observe a forced change in parity, abandonment of a pegged exchange rate, or an international rescue. For an episode to qualify as a banking crisis, we must observe either ba nk runs, widespread bank failures and suspension of convertibility of deposits into currency such that the latter circulates at a premium relative to deposits (a banking panic), or signi? ant banking sector problems (including but not limited to bank failures) resulting in the erosion of most or all of banking system collateral that are resolved by a ? scally-underwritten bank restructuring. (15–16) The above de? nitions are adopted in this paper. In the next two sections, we analyze the e? ects of banking crises and currency crises on the macroeconomy and trade. 8. 3 Impact of Banking Crises A classical framework of bank runs was developed by Diamond and Dybvig (1983). Let us recapitulate the key elements of their model. Agents are endowed with goods that can be invested in a long-term project or stored without costs. The long-term project is pro? table but illiquid, that is, if investors do not liquidate the project before it matures, its return is greater than the initial investment; however, if the project is liquidated before it matures, the ? re-sale return is less than the initial investment. Each agent can be impatient or patient with ? xed probabilities, but there is no aggregate uncertainty, that is, the total number of impatient agents is ? xed and known by all agents. At the beginning, agents do not know their own types but must decide if they will invest in the project. After they have invested (or have decided not to invest), but before the project matures, each agent realizes his or her own type. Impatient agents must consume immediately, whereas patient agents do not consume anything until the project matures. Agents’ types are private information, so even if each agent knows his or her own type, other people do not know. The E? ects of Financial Crises on International Trade 257 On the one hand, if an agent does not invest in the project but turns out to be patient, then the agent has missed a pro? table investment opportunity.

True Friendship Essay Example

True Friendship Essay Example True Friendship Essay True Friendship Essay Francisco Castro English 11 Mr. Woythaler/Mr. Lombardo February 27, 2010 In the novella Of Mice and Men by John Steinbeck many topics come up throughout the story. Topics that are about bonds between two people and about people who are lonely. These controlling ideas are used to make different themes in the story. The novella Of Mice and Men by John Steinbeck expresses themes of Friendship and Loneliness through various literary elements. The theme of a true friend that is always there when he rather is somewhere else is expressed through the use of characterization and conflict. George is characterized as a serious, short tempered man but he has a strong bond with Lennie. He had always told a story with Lennie about a dream and while he was saying the story Lennie says, â€Å"But not us! An’ why? Because . . . because I got you to look after me, and you got me to look after me and that’s why† (14). George always is angered by mistakes Lennie does and sometimes wishes he wasn’t with Lennie but he stays because he really needs him and Lennie needs him too. Lennie is characterized as a slow-witted friendly man. Lennie is a loving person he is the nicest creature but he has a strength that he cannot control. He is so strong he can’t control it sometimes and it has caused Curley to break his hand and the death of Curley’s wife. He is slow-witted and needs George to guide him but sometimes he wants control so he likes to pet things and take control over them. Conflict is another literary device that helps develop the theme. The Conflict between Lennie and Curley when Lennie had killed Curley’s wife accidently showed the friendship between George and Lennie. George decided to kill Lennie so that Lennie would die without knowing instead of being possibly tortured and dying with the knowledge of it. George told Lennie his story about their dream and shot him in the back of the head without knowing so Lennie died happily. George ironically saved his friend from being killed by killing him in order of making sure he doesn’t die with torture. This theme was made because of literary devices and can make more themes throughout the story. The theme

Push and pull factors in Syrian migration Assignment - 3

Push and pull factors in Syrian migration - Assignment Example When the war started in Syria, it was a matter of a few bombings which shook the Syrian households. Many of them decided to move away from the neighborhood and come back once the crisis situation is covered (Semple, 2014). However, situations worsened to the degree that many of these people who had only left home for a few days, had to flee the country in order to sustain their families. The United Nations has been undertaking massive rehabilitation programs to ensure that the refugees in the camp are resettled in other countries. Many Syrian families are settled in United States and have been looking to resume normal life. But is it all that easy? Governments may crash and powers might be taken away, but what affects the life of common people the most is the loss of one’s own family, homes, and stability in life. One of the greatest influencers in a person’s life is the education that he receives during childhood and teenage times. Children of such migrant families and those who have stayed back in Syria have not been able to attend a full fledged school for quite some time now. This crash of education system further gives them more reason to migrate to other countries, where at least through education, they will be able to revive their lives and take care of their families. In a study that concentrated on tracing the lives of Syrian families which had been forced to migrate, it was found that the refugees were mostly legal, but there were many sections of them who had migrated illegally and were stuck in the middle of nowhere. According to the survey, it was found that the number of illegal immigrants trying to migrate to Europe had steadily risen over the years, while there was a sharp rise in their number in 2013 (Stevis, 2014). If the world order has to take control of its unfortunate members, then it is high t8ime the major moves were

Unequal Rules for Women Entrepreneurs and Workers Research Paper

Unequal Rules for Women Entrepreneurs and Workers - Research Paper Example "Increasing women's economic opportunities improves the well-being of families and communities, reduces poverty, and stimulates economic growth," said Rita Ramalho, lead author of the report. "Many factors shape women's opportunities to run successful businesses and get good jobs. Equitable business regulations are one piece of the puzzle." Women, Business and the Law2010analyzes differences in formal laws and institutions affecting women's prospects as entrepreneurs and employees across six topics-accessing institutions, using property, getting a job, dealing with taxes, building credit, and going to court. The report is the first to measure the gender gap in policy variables using quantitative and objective data. It does not measure all aspects that matter for women's economic opportunities. For example, it does not measure access to childcare, education, or personal security. "Gender differentiation in law sometimes arises out of a desire to protect women, but it may inadvertently limit their opportunities," said Penelope Brook, Director of the Global Indicators and Analysis Department of the World Bank Group.

Dr. Jekyll and Hyde analysis Essay Example for Free

Dr. Jekyll and Hyde analysis Essay The only reason he would be acting like this, even though Jekyll is ofa higher class, he wants to be associated with Hyde for a reason he does not want his friends to know. As if Jekyll was not acting odd enough already he defends Hyde no matter he does, Jekyll always attempts to justify Hydes actions. Also he has listed everything in his will to Mr. Hyde for unknown reasons at the time only raising more curiosity from the charcters in the book as well as the reader. Throughout known history London has been seen as a symbol of wealth and prosparity, but Stevenson shows the other side. And if any time he dozed over, it was but to see it glide more stealthily, even to dizziness, through wider labyrinths of lamp-lighed city, and at every street corner(Stevenson 8). The city of London is drastically different from peoples general idea of that city. Most people think of all the hisorical landmarks and areas, not the poorer sections that Stevenson tends to focus on. He may be doing this to help sumbliminatley further the idea of the duality in people. Maybe trying to convince the people that if a city can be split in its personality so can the people of this world. Earlier the Ying-Yang was compared to Jekyll and Hyde and it was extremly well demonstraighted towards the end of this book when it is revealed to the reader that Jekyll revealed he wanted to be Hyde. The power of volventary chance be forfieted, and the character of Edward Hyde become irrevocably mine0ekyll/Hyde 48). Jekyll had always wanted to be a rulebreaker like Hyde, growing up in wealthy family he had a reason and a need to rebel against what was exspected of him. Jekyll seemed to want to live on the other side of life to experience all aspects of what life at the ime had to offer. It is Just a natural instinct of some people to rebel out of not being satisfyed. Or, in Dr. Jekylls case wanting to experence the other side in this world. Stevenson repeatedly brings up this idea throughout the text, while never coming out and saying it. Stenson is able to bring this idea up in every readers mind multiple times. This story was also possibly wrote to show everyone that has read it that nobody is purely good or evil, there is no black or white, that everyone no matter what they do is Just a shade of gray. Dr. Jekyll and Hyde analysis By zooglicious

Gathering at the River: Cruising on East Speedway :: Essays Papers

Gathering at the River: Cruising on East Speedway "Whither goest thou, America, in thy shiny car in the night?" -Jack Kerouac, On the Road Roll the windows down, turn the music up, and drive slowly. Now you're cruising. Cruising is the art of seeing and being seen, and in Tucson the center of this art is Speedway Boulevard. This six-lane street runs east to west through Tucson and is one of the busiest thoroughfares in the city. It hosts a mix of commercial and private buildings: small shops, offices, restaurants, grocery stores, apartment buildings and older homes, as well as the University of Arizona. Despite the apartments and occasional houses, Speedway is mostly a commercial street populated with strip malls and other businesses. Cruising is most visible along the more commercial, business-oriented East Speedway, which for the purposes of this essay is defined as the three mile stretch of road from Alvernon to Wilmot. Like most streets, Speedway was built for an entirely practical reason: to conduct automobile traffic from one place to another with a minimum of waiting. This utilitarian reason is inverted by cruising. The purpose of cruising, unlike driving, is not to arrive but to not arrive. Cruising is a social activity wherein the cars become tools for meeting other people as well as a means of getting from one place to another. The reputation of cruising, and of the nighttime Speedway, is not nearly so benign. As traffic slows and the music increases, the character of Speedway as a place - that is, a focus for human memory and experience - changes to reflect the activities and desires of the cruisers. The character of Speedway as a place is temporal and spatial; the street of Friday midnight is radically different from the street of Tuesday morning. Daytime drivers quickly change lanes in an attempt to find the one which will deliver them to their destinations the fastest. Speed and efficacy define the daytime Speedway. As the type of driver changes, so does the driver's reason for being there. The weekday commute is replaced by the weeknight cruise. The drivers also become, as a group, less diverse in terms of age and gender. The majority of cruisers appeared to be teenagers. Also, though I saw many young women, the majority of cruisers were male.

Akron’s children Hospital (Case Study)

Akron Children’s Hospital started as a day care nursery provider in 1890 and became one of the largest pediatric healthcare system in the united state. Akron Children’s Hospital is located in a friendly community of Akron, Ohio. With more than 3000 pediatric specialists Akron Children’s Hospital offers over 30 practice areas of medicine and surgery specialized for children which help the hospital draw over half a million patients a year not only from the United states, but also from all over the world(akronchildrens. org). Akron Children’s Hospital mission is to provide medical treatments to infants, children, adolescents, as well as burn victims of all ages. The hospital also provide basic and clinical research and provide multi-level professional education students of medicine, nursing, as well as Akron residents and various allied health professions. Moreover, the hospital is continuing to provide education to encourage and to make it easy on the process of lifelong learning for physicians and other children’s care providers in the health care industry. Akron Children’s Hospital commitment is to maintain the maximum quality of care for children by using the latest modern technology and equipment available. Akron is committed to promote integrity, emphasize the dignity, family member and fellow employee to follow the topmost standards of ethical conduct. The hospital is committed to maintain and press forward the hospital’s leadership role to successfully work pleasantly with other health care networks providers, community organizations, businesses as well as government to maintain a proficient professional allied and lastly operation. According to Cooper & Schindler† the basic dilemma and starting trying to develop other question by breaking down the original question is the right way to approach the research process†( Cooper & Schindler,2008). The management-research question hierarchy for Akron Children’s Hospital is that the hospital faces is how to raise the bed-occupancy rate and what can the hospital do to gain more business than its competitors. Another dilemma in Akron’s case the management is that Akron Children’s hospital distinguishing itself from many of their competitors. The research question for Akron Children’s hospital was about expending their service beyond Summit County to other different counties such as Cuyahoga County, Portage County, Mahoning County, and Medina County, which will increase the number of the patient and bring more profit. Some of the investigative questions for Akron Children’s hospital were as follow: How do children’s parent decides which hospital to take their children to, when their children need acute care? Is their decision driven simply by emotion? Is the financing a determine factor? Is the quality of service a factor on their decision? (Cooper & Schindler, 2008). During the research process Marcus Tomas LLC team had to observed physicians, parents, and child patients during testing, diagnosis, and treatment phases, they were also observing while kids were during checkups, admitted to the ER, undergoing surgery as well as prepping for surgery. They pay great detail to the interactions of patients and physicians, nurses and other staff members; they pay attention, physical and emotional reactions and heart-wrenching conversations (Copper, Schindler, 2008, cases, p. 2). The Advantages of it all is that researcher s can see a step- by-step first-hand the experiences between parents, children and hospital staff in the hospital. Furthermore, Researchers can immediately record their observances and findings. The recordings of audio or video were very good solid evidence therefore there weren’t not a lot of room for error in this method. Researchers made sure that all staff of the hospital was fully invested into the well-being of their child patients. The researchers were able to see how technology, highly energetic staff, highly knowledgeable staff and full compassion for the children work in collaboration. They saw a very strong desire by the entire hospital for the children recover and be the best they can possibly be once leaving the hospital. Some of the disadvantages are that researchers did not gain any knowledge of past experiences if all they do is watching the present. Researchers cannot really gain opinions by this method. Equipment and staffing can be extremely expensive. Some test subjects may act different or be more anxious if they know someone is watching and/or recording interactions. Conclusively Akron Children’s Hospital management and executives have come to conclusion and realized that the process of overcome the competitors surfing above competitor’s shadow, also generating an effective marketing plan will require an extensive qualitative research. They made a decision of hiring Marcus Thomas LLC. Overall the research was well executed because in the long run Akron Children’s Hospital was able to gain an increase on the number of patients admitted to the hospital, as the result of a better comprehension based on the patients’ parent point of view about their needs and their perspectives. References Cooper, R. D., & Schindler, S. P. (2008). Business Research Methods. (10th Edition) New York: McGray-Hill/Irwin. Cooper, R. D., & Schindler, S. P. (2008). Business Research Methods – Cases. (10th Edition) New York: McGray-Hill/Irwin. (N. D). (2010). Corporate info. Akronchildrens.org. Retrieved May 23, 2013 from: https://www.akronchildrens.org/cms/site/14908a4d74b348d5/index.html (N.D). (2010). Akron Children's Hospital, Ohio /overview. U.S.News & World. Retrieved May 23, 2013 from:http://health.usnews.com/best-hospitals/akron-children's-