Talk:Terms of trade/Archives/2013

Example Problem

The example says:

For example, if a country exports 50 dollars worth of product in exchange for 100 dollars worth of imported product, that country's terms of trade are 50/100 = 0.5.

This is totally unclear. How can you give 50 dollars of a product in exchange for 100 dollars of another? Doesn't this all have to be based on some nominal measure of a defined set of goods? Like a market basket used for CPI calculations? At that point you can say that the relative value of the imported goods have gone up or down when compared to the exported goods, but barring that, what is the meaning? Please clarify. — Preceding unsigned comment added by 69.66.249.35 (talk) 14:22, 18 April 2013 (UTC)

Protectionism?

So there's just an advantages section... I think that's unreasonable? I'll edit it in the next week if no one wants to take up that task. Santucci (talk) 18:21, 7 May 2009 (UTC)

Not sure what this section is doing in this article in the first place. As currently drafted, doesn't even refer to the terms of trade. I've deleted it. --75.34.30.230 (talk) 23:58, 23 June 2009 (UTC)

Formula

I fail to understand the logic behind the formula

${{p_{x}^{c}\,q_{x}^{0}} \over {p_{x}^{0}\,q_{x}^{0}}}\left/{{p_{m}^{c}\,q_{m}^{0}} \over {p_{m}^{0}\,q_{m}^{0}}}\right.$

 

The parameters ${{q_{x}^{0}} \over {q_{x}^{0}}}$ and ${{q_{m}^{0}} \over {q_{m}^{0}}}$ each equate to 1, and the concept of "price" eg ${p_{x}^{c}}$ is not adequately explained. What is "price"?

Chalky (talk) 01:15, 2 December 2010 (UTC)

Social welfare usage

The importance of the use of Terms of Trade as a social welfare equivalent seems over-emphasised, is it so important that it belongs in the introductory section, or should it be in the Limitations? Chalky (talk) 02:20, 2 December 2010 (UTC)

Relationship to other metrics

How does Terms of Trade relate (mathematically and as-used) to Balance of trade? Chalky (talk) 02:22, 2 December 2010 (UTC)

Terms of trade and exchange rate

The terms of trade is influenced by the exchange rate. When the currency of a country appreciates, every dollar of this country can buy more, say US dollars in the foreign exchange market. As a result, the price of imports for this country decreases. However, what the country produces within its own borders, would not get directly affected by how much its currency costs in the foreign exchange market, because technically this country is using its own resources to produce these products. For example, if the country is capable of producing apples, then all the resources that are required to supply apples should all come from within its own borders thus how much its currency costs in the foreign exchange market would not influence the price it's selling apples within its borders, UNLESS some essential ingredients to the production of this country's exports require imports from other countries. This is why the appreciation of the country's currency in the foreign exchange market is hurtful to the exporters, because their products are now costing more in the international market, yet they cannot enjoy any benefit from the appreciation of the currency since they don't usually buy any parts required in their productions from other countries (if they do, they would also be able to enjoy the appreciation by means of a lower cost of production).130.216.217.113 (talk) 12:50, 4 September 2011 (UTC)