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Course Description
This course is an
introduction to international trade and trade policy. Its objective is
to provide students with a guide to the international trade that is
comprehensive and up-to-date and help them to understand the theoretical
aspect of trade policy. It covers the basic theories of comparative
advantage, factor endowment and trade patterns, economies of scale and
imperfect competition, and reviews different arguments for restrictive
trade policies and their partial and general equilibrium impacts. The
course is based on the assumption that students are familiar with
microeconomics at the undergraduate level. Students who need to review
the principles of microeconomics and basic techniques should read a
principles-level textbook.
Course Requirements and Student Assessment
There will be two short
quizzes, covering trade theory and policy, and a short paper. Each quiz
carries a weight of 25 percent in the final grade for the course and the
paper carries a 50 percent weight. The paper will analyze trade
practices and policy arguments. Specific information on the paper will
be distributed in class.
Course Materials
1.
Paul Krugman and Maurice Obstfeld, International Economics:
Theory and Policy, 3rd edition, HarperCollins Publishers Inc., 1994
(cited as K&O).
2.
Dominique Salvatore, International Economics, 5th edition,
Prentice Hall, 1995.
3.
Financial Times.
A daily newspaper with excellent coverage of current economic issues.
4.
The Economist.
A weekly magazine with more in-depth analysis of current international
economic issues.
The main text is Krugman and
Obstfeld. Salvatore is recommended for students who have difficulty with
basic concepts and theories.
Course Schedule and Assignment
Class 1:
Introduction
Labor
Productivity and Comparative Advantage
Readings:
K&O, Ch. 1, pp.3-5; or S, Ch. 1, pp. 1-10.
K&O, Ch. 2; or S, Ch. 2.
Class 2:
Discussion:
Comparative advantage and American Jobs
Specific Factors and Income Distribution
Readings:
“Not So Absolutely Fabulous,” The Economist, 11/4/1995
“The Miracle of Trade,” The Economist, 1/27/1996
K&O, Ch. 3; or S, Ch. 3.
Class 3:
The
Heckscher-Ohlin Trade Theory
Readings:
K&O, Ch. 4; or S, Ch. 5.
Grant, Richard, M.C. Papadakis and J.D. Richardson. “Global Trade
Flows: Old Structures, New Issues, Empirical Evidence,” in Pacific
Dynamism and the International Economic System, Institute for
International Economics, Washington, D.C. 1993, pp. 24-29.
Class 4:
Frst
Quiz
Discussion: Are Your Wage Set in Beijing?
Readings:
“Working Man’s Dread - How Far Does Trade With the Third World
Endanger the Jobs of Low-skilled Workers?” The Economist,
10/1/1994.
Freeman, Richard. “Are Your Wages Set In Beijing?” Journal of
Economic Perspectives, Vol. 9, No. 3 (Summer/1995).
Richardson, David. “Income Inequality and Trade: How to Think, What to
Conclude,” Journal of Economic Perspectives, Vol. 9, No.3
(Summer/1995).
Class 5:
Economies
of Scale and Imperfect Competition
Readings:
K&O, Ch. 6; or S, Ch. 6.
Grant, Richard, M.C. Papadakis and J.D. Richardson. “Global Trade
Flows: Old Structures, New Issues, Empirical Evidence,” in Pacific
Dynamism and the International Economic System, Institute for
International Economics, Washington, D.C. 1993, pp. 29-56.
Class 6:
Trade
Policy Tools
Tariff: Partial and General Equilibrium Analyses
Readings:
K&O, Ch. 9. pp. 195-206.
S, Ch. 8, pp. 219-226, 232-235.
“The Tyranny of
Triangles,” The Economist, 7/16/1994.
Class 7:
Non-tariff
Barriers: Partial and General Equilibrium Analyses
Political Economy of Trade Policy
Readings:
K&O, Ch.9. pp. 206-216, Chs.10, 11,
S. Ch. 9, pp. 257-268.
Class 8:
Second
Quiz
Strategic Trade Policy and Industrial Policy
Readings:
K&O, Ch.12.
S. Ch. 9, pp. 268-278.
Corden, W. Max. “Strategic Trade Policy: How New? How Sensible?” World
Bank Working Paper, April 1990.
Strategic Trade Policy and the New International Economics, the
MIT Press, 1995.
Class
9:
Paper due.
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