Department of Economics
Econ 290- International Trade
Spring 2017
Instructor: Min Min Thaw, Ph.D.Office: Benicia Hall 1019
Email: Office Phone: 916-278-4624
Office Hours: Monday 9:45 to 11:45 a.m., Tuesday 11:15 to 1:15 p.m., or by appointment
Class Time: Monday 5:30 to 8:20 p.m.
Course Description:This course analyzes the modern trade theories, their empirical relevance and the role of multinational firms in the evolution of international trade patterns. Discussion focuses on theoretical and empirical evaluation of trade policy instruments. (University Description) Prerequisite: Classified graduate status in Economics or instructor permission.
I intend to include international finance and open economy macroeconomics in this course as well. We will briefly examine balance of payments, exchange rate determinations, international policy coordination and capital markets.
Required Textbook: International Economics, 3rd edition by Robert Feenstra and Alan Taylor. (2014) Worth Publishers.
Grading:
In Class Participation and Assignments20%
Two midterms40% (20 each)
Literature Review Project20%
Research Proposal20%
The curve looks roughly like this:
89+ A and A-
79to 88 B+, B, and B-
69 to 78 C+, C, and C-
59 to 69, D+, D, and D
Below 58 F
Guidelines and requirements for literature review project and research proposal will be posted on the curse webpage through SacCT.
Exams: Each exam will consist of multiple choice questions and short essay questions. The essay questions will be evaluated and graded based on your demonstration of your understanding of the concepts and the clarity of your writing. All exams are closed books, and close notes.
You are responsible to bring a Scantron form (#882-E) and a simple calculator. No cell phones or note cards are allowed. No make up exams will be given unless there has been a major catastrophe and I have been notified in advance.
If you are sick, you need to provide me with a physician’s note that clearly states that you could not have taken a midterm or final on the date it was given. Merely being seen by a physician is not sufficient. Failure to provide a legitimate university excuse will result in a zero on the exam. Grade of incomplete will not be given.
Class Policies: Regular attendance REQUIRED. You are responsible for all work missed due to absences. Get the missed notes from a classmate as soon as possible following your absence to maintain a flow of materials.
Should you have reason to come to class late or to leave class early, please feel free to do so, but remember that all missed work is your responsibility. Please be courteous in entering and leaving a lecture and make all attempts not to disturb your classmates.
Academic honesty is expected. You are encouraged to work together and help each other in studying and in-class assignments. However, work submitted for grade must be that of an individual student. Academic dishonesty and plagiarism as described in the University policy may result in an “F” grade, should there is an evidence of cheating in the exams, in homework assignments, or in writing research proposal.
No plagiarism is allowed. The University Policy Manual defines the plagiarism as
“Plagiarism, as a form of cheating, is the use of distinctive ideas or works belonging to another person without providing adequate acknowledgement of that person’s contribution. Regardless of the means of appropriation, incorporation of another’s work into one’s own requires adequate identification and acknowledgement.”
For more details, please visit:
If you have a disability and require accommodations, you need to provide disability documentation to SSWD, Lassen Hall 1008, (916) 278-6955. Please discuss your
accommodation needs with me after class or during my office hours early in the semester.
Tentative Course Outline
Week / Topic / Reading1: January 23 / Syllabus
Introduction: Trade in the Global Economy
And National Income Accounting and Balance of Payments / Chapter 1 (F and T)
2: January 30 / Discussions: 1) Antonucci and Manzocchi 2) Carrere / Articles
3: February 6 / Trade and Technology: The Ricardian Model / Chapter 2 (F and T)
4: February 13 / The Ricardian Model continued / Chapters 2
5: February 20 / Gains and Losses from Trade in the Specific-Factors Model / Chapter 3
6: February 27 / Trade and Resources: The Heckscher-Ohlin Model / Chapters 4
7: March 6 / Midterm I
8: March 13 / Movement of Labor and Capital Between Countries / Chapter 5
9: March 20 / Spring Break
10: March 27 / Increasing Returns to Scale and Monopolistic Competition / Chapter 6
11: April 3 / Discussions: 1) Ottaviano and Giovanni 2) Hummels and Levinsohn / Articles
12: April 10 / Import Tariffs and Quotas Under Perfect Competition / Chapter 8
13: April 17 / Discussion: Feenstra / Articles
14: April 24 / Midterm II
15: May 1 / The Global Macroeconomy and Intro to Exchange Rates and the Foreign Exchange Market / Chapters 12 and 13
16: May 8 / National and International Accounts; Income, Wealth, and the Balance of Payments AND The Gains from Financial Globalization / Chapters 16 and 17
Reading List
Notes:
- Disclaimer: This list is subject to change as we progress through the semester.
- * designated articles/book chapters are required readings and will be covered in detail in class.
1.Ricardian Model
1.1Theory
*F and T: Chapter 1
Dornbusch, R., S, Fischer, and P. Samuelson, (1977), “Comparative Advantage, Trade and Payments in a Ricardian Model with a Contunuum of Goods,” American Economic Review, 67, 823-839.
1.2 Empirical Evidence
Golub, S and C-T Hsieh, (2000), “Classical Ricardian Theory of Comparative Advantage Revisited,” Review of International Economics, 8(2), 221-234.
Balassa, B., (1963), “An Empirical Demonstration of Classical Comparative Cost Theory,” Review of Economics and Statistics, 45, 231-238.
2.Heckscher-Ohlin Model
2.1Theory
* F and T: Chapter 4
Dornbusch, R., S. Fischer, and P. Samuelson, (1980), “Heckscher-Ohlin Trade Theory with a Continuum of Goods,” Quarterly Journal of Economics, 95, 203-224.
2.2Empirical Evidence
Davis, D.R and D.W. Weinstein, (2001), “An account of Global Factor Trade,” American Economic Review, 91(5), 1423-53.
Debaere, P., (2003), “Relative factor Abundance and Trade,” Journal of Political Economy, 111, 589-609.
Brecher, R. A. and E.U Choudhri, (1982), “The Leontief Paradox, Continued,” Journal of Political Economy, 90(4), 820-823.
Helpman, E., (1999), “The Structure of Foreign Trade,” Journal of Economic Perspectives, 13(2), 121-44.
3.Specific Factors Model
* F and T: Chapter 2
Neary, J., (1978), “Short-Run Capital Specificity and the Pure Theory of International Trade,” Economic Journal, 88, 488-510.
4.Economies of Scale and Monopolistic Competition- Theory
* F and T: Chapter 6
Krugman, P. R., (1979), “Increasing Returns, Monopolistic Competition, and International Trade,” Journal of International Economics, 9, 469-479.
Krugman, P. R., (1980), “Scale Economies, Product Differentiation, and the Pattern of Trade,” American Economic Review, 70, 950-959.
Krugman, P.R., (1981), “Intra-Industry Specialization and the Gains from Trade,” Journal of Political Economy, 89, 959-973.
5.Monopolistic Competition
5.1The Gravity Model-Theory
* F and T: Chapter 6
Anderson, J.A., (1979), “A Theoretical Foundation for the Gravity Equation,” American Economic Review, 69, 106-116.
5.2. Evidence
Debaere, P., (2005), “Monopolistic Competition and Trade, Revisited: Testing the Model without Testing for Gravity,” Journal of International Economics, 66(1), 249-266.
* Hummels, D. and James Levinsohn, (1995), “Monopolistic Competition and International Trade: Reconsidering the Evidence,” Quarterly Journal of Economics, 110(3), 799-836.
Redding, S., and A. J. Enables, (2004), “Economic Geography and International Inequality,” Journal of International Economics, 62, 53-82.
Trifler, D., (2004), “The Long and Short of the Canada-U.S. Free Trade Agreement,” American Economic Review, 94, 870-895.
6.Political Economy and Trade Policy
* F and T: Chapter 8
Grossman, G and E. Helpman, (1994), “Protection for Sale,” American Economic Review, 84(4) 833-50.
Baldwin, R.E., (1989), “The Political Economy of Trade Policy,” Journal of Economic Perspectives, 3(4), 1999-135.
Karacovoli, B., (2011), “Productivity Matters for Trade Policy: Theory and Evidence,” International Economic Review, 52(1), 33-62.
Mitra, D., (1999), “Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination,” American Economic Review, 89, 1116-1134.
Goldberg, P.K. and G Maggi, (1999), “Protection for Sale: An Empirical Investigation,” American Economic Review, 89(5), 1135-55.
Readings for Week (Articles)
- *Antonucci, D. and S. Manzocchi, (2006), “Does Turkey Have a Special Trade Relation With the EU?: A Gravity Model Approach,” Economic Systems, 30(2), 157-169.
*Carrere, C., (2006), “Revisiting the Effects of Regional Trade Agreements on Trade Flows with the Proper Specification of the Gravity Model,” European Economic Review, 50(2), 223-247.
- *Ottaviano and Giobanni Peri, (2005), “Rethinking Gains from Immigration: Theory and Evidence from the U.S,” National Bureau of Economic Research, W11672
*Hummels, D. and James Levinsohn, (1995), “Monopolistic Competition and International Trade: Reconsidering the Evidence,” Quarterly Journal of Economics, 110(3), 799-836.
XII. * Feenstra, R. C., (1992), “How Costly is Protectionism?” The Journal of Economic Perspectives, 6(3), 159-178.
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