HIGHER SCHOOL OF ECONOMICS

DEPARTMENT OF ECONOMICS

INTERNATIONAL TRADE

February7 – June 13, 2013

Syllabus

Duration: 32 lectures over 16 weeks

Lectures: Thursdays, 16:40-19:30.

Room: 5215

Professor: ErenArbatli

Office:Shabolovka Campus, room 3116 A

E-mail:

Office Hours: Mondays, 11:00-13:00

TA: Olga Zyuzina

E-mail:

TA sections: TBA

PRE-REQUISITE

Microeconomics 1-2 and Macroeconomics 1-2

COURSE DESCRIPTION

This course aims to introduce students to both classical and modern theories of international trade in goods and services. In particular, the goal of this class is to understand three main issues: (i) the pattern of international trade; (ii) the effect of trade on income distribution; and (iii) the effect of trade policy on a country’s welfare. The class will use two integrated approaches. First, it will develop several theoretical models of international trade. The models will provide a framework to think about international trade problems. Second, the class will present important contemporary debates on issues such as globalization, strategic trade, agricultural subsidies, bilateral trade agreements and the work of the WTO.

ASSESSMENT

There will be two exams: One towards the end of 3rd module (March 25-29) and one at the end of the course (final exam).

The final grade consists of the following elements:

  • Home assignments – 25%
  • Mid-courseexam – 25%
  • Final exam – 50%

I expect class participation from students throughout the semester. An outstanding participant will routinely voice good comments, and always be on time for class. A good participant will occasionally express insightful comments, and be on time for class. I expect you all to be good or exceptional participants.

READINGS AND RESOURCES

1. Textbook:Krugman, Paul and Maurice Obstfeld, International Economics: Theory and Policy, 8th edition. (Addison Wesley).

2. Special Readings and web pages will be sent via course group e-mail.

TENTATIVE COURSE OUTLINE

Motivation: The Latest Research

If you’d like, see these articles:

Eichengreen, Barry, and Douglas Irwin, “The Protectionist Temptation: Lessons from the Great Depression for Today” in

Andrew Rose “The International Economic Order in the Aftermath of the Great Recession”, in

Chapter 1: Introduction

  • Important issues in international trade
  • Gains from trade
  • Pattern of trade
  • How much trade?

Articles: Trade Bounty, the Economist, 12/2/04

In the steps of Adidas, the Economist, 2/8/07

Opening the Floodgates, the Economist, 5/7/09

Quinoa’s Global Success Creates Quandary at Home, New York Times, 3/19/11

Chapter 2: The Gravity Model & Changing Patters of Trade

  • Who trades with whom?
  • Changing pattern of world trade

Articles:

New York Times, “Outsourcing is Climbing Skills Ladder”, 2/16/06

S. Edwards, How Chile Can Make the Most of its US Trade Deal, WSJ 1/3/03, in

Frankel, Jeffrey and E. Cavallo, Trade Openness Reduces Financial Vulnerability, in
Sala-i-Martin, Xavier, Economic Growth is Reducing Global Poverty, in

Wei, Shang-Jin and Y. Wu, Globalization Reduces Inequality in China, in

Hanson, Gordon, Globalization and Poverty in Mexico, in

Chapter 3: The Ricardian Model

  • Ricardo and Comparative Advantage
  • Empirical Evidence on the Ricardian Model

Articles:

Faster, cheaper, better, The Economist, 11/11/04

A world of opportunity, The Economist, 11/11/04

Paul Krugman “Reckonings: Hearts and Heads”, the NY Times, 4/22/01

Paul Krugman “Wal-Mart excuses”, the NY Times, 12/12/05

Edmonds, Eric & N. Pavcnik “Globalization reduces child labor in Vietnam”, in

Doubts on Cheap Labor, Financial Times, 4/5/11

Chapter 4: The Heckscher–Ohlin Model

  • Effects of International trade between two-factor economies
  • Factor-price equalization
  • Distributional consequences of trade

Articles:

Hanson, Gordon “What happened to wages in Mexico since NAFTA?” in

The Caribbean, The Economist 9/22/05

Blinder, Allan: “Free Trade’s Great But Off-shoring Rattles Me”, Washington Post, 5/8/07, in

Greg Mankiw’s blog on the subject, in

NY Times, "Why Is Income Inequality in America So Pronounced? Consider Education", May 17, 2007

Chapter 5: The Standard Trade Models and Country Welfare

  • A standard model of a trading economy
  • Welfare effects of changes in the terms of trade

Article:

Sokoloff, K. et.al. “Global links raise Asian countries’ productivity” in

Wacziarg and Horn Welch, “Trade Liberalization and Growth: New Evidence”, Oxford University Press, 2008

Chapter 6: Economies of Scale Imperfect Competition & Technology

  • Economies of scale and the theory of imperfect competition
  • Monopolistic Competition and Trade
  • Protection and imperfect competition
  • Theory of External economies
  • External economies and international trade

Articles:

Friedman, Thomas “Losing our edge”, NY Times, 4/22/04

Poverty’s chains, The Economist, 10/9/03

Mankiw, Gregory and P. Swagel “Antidumping: The third rail of trade policy”, Foreign Affairs, Dec. 2005

Stepping Up the Pressure Against Piracy in China, NY Times, 12/6/04

The Miracle of the Cerrado, the Economist, 8/26/10

Chapter 7: Immigration & capital movements

  • International labor mobility
  • Direct foreign investment and multinational firms

Articles:

Brown, D, A. Deardorff & R. Stern “Multinationals, wages & working conditions in developing countries”, NBER Digest, October 2003, in

The brain drain cycle, The Economist, 12/8/05

Myths and Migration, The Economist, 4/6/06

Footloose firms, The Economist, 5/25/04

Damuri and Peri, “Immigration: Evidence from Europe”, NBER Working Paper 17139, June 2011

Chapter 8: Trade Policy

  • Economics of tariffs and export subsidies
  • Economics of Quotas
  • Voluntary Export restraints and local content requirements

Articles

Europe’s farm follies, The Economist, 12/8/05

A harvest of disgrace. The Eonomist,.5/22/08

The Doha round. The Economist, 7/31/08

Dead Man Talking, The Economist, 4/28/11

Chapter 9: Protection, Free trade & the WTO

  • The case for free trade
  • National Welfare arguments against free trade
  • Income Distribution and Trade Policy
  • International negotiations and trade policy

Articles:

Trefler, Daniel, The Long and Short of the Canada-US FTA, AER, Sept. 2004

In the rough, The Economist, 11/3/05

Do despair, The Economist 7/8/05

Tang, Man-Keung and Shang-Jin Wei, “The Value of Making Commitments Externally: Evidence from WTO Accessions”,

Irwin, Douglas, GATT Turns 60”,

Round One, Boeing. The Economist, Sept 4, 2009.

Defying Gravity and History. The Economist, 8/5/10 (just to read)

The WTO and China, The Economist, 7/7/11

Chapter 10: Trade policy in Developing Countries

  • Import Substitution and Infant Industry argument
  • Export-oriented development strategies

Chapter 11: Controversies in Trade Policy

  • Sophisticated Arguments for Activist Trade Policy
  • Globalization and Low-Wage Labor
  • Globalization and the Environment

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