REVISED 15 MARCH 2010
Economics 441/541
International Trade and Commercial Policy
Syllabus Spring 2010
Tuesday/Thursday 11:15 – 12:30 1006 FSB
James A. Dunlevy Office Hours: Monday: 11 – 11:30, 2 – 3:30
3021 FSB Tuesday: 2 – 3:30
Telephone: 529-0554 Wednesday: 11 – 11:30, 2 – 3
& by appointment
Texts:
Markusen, J. R., et al., International Trade: Theory and Evidence, 1995. (Available as a set of 5 pdfs at http://spot.colorado.edu/~markusen/textbook.html.
[used with permission of the authors, who are the copyright holders])
Irwin, Douglas A., Free Trade under Fire, 3d ed., Princeton University Press, 2009. [paperback] {available at the Miami Coop}
Handouts & Readings—generally via the instructor’s web page:
http://www.sba.muohio.edu/dunlevja/ , then link through “Courses.”
The text is some 15 years old; it has, however, a more consistently appropriate level of presentation across the various topics than what is found in the other texts with which I am familiar. Some of the readings, also, will be “classics,” i.e., old. They are assigned because they are the classics.
Note: This course has as pre-requisites ECO 315 (Intermediate Microeconomic Theory) and a course in calculus. There can be no exception to this requirement; peruse the readings if there is any question as to the basis for this policy.
This course deals with the so-called “real” or “barter” side of international economics; it is complemented by ECO 442, which covers the monetary and macroeconomic aspects of the field. Topics covered include the bases for trade: differences in technologies, tastes, endowments, industrial structure, social policy; the effects of trade on real income and on income distribution; the effects of barriers to trade, international factor movements—including labor migration—and their effects, and the relationship between growth and trade. The method of presentation is both theoretical and empirical. One objective of the course is to review and to build on intermediate microeconomic theory. You will, in addition, be exposed to methods of testing trade theories. A quick introduction to empirical methods will be provided as needed.
The course, however, is also an introduction to the issues of international economics. Therefore, the assigned readings will cover not only theory and empirical methods, but also
Economics 441/541 Syllabus Spring 2010. p. 2.
issues and policy. The course likely will be intense, and you should be prepared to make a significant commitment to it. Please do the reading before the class for which it is scheduled.
Your course grade will be based on 2 mid-term exams (each worth 35 % of the total grade), and a final exam (30 % of the total grade). I hope to have the midterms in the evenings of the dates listed. The first mid-term exam is tentatively scheduled for Wednesday, 24 February; the second exam is scheduled for Wednesday, 14 April. NOTE: The tentativeness of the exam dates and times will be resolved when the Registrar’s Office has an opportunity to confirm rooms or times for evening exams. At this time, therefore, we must live with “tentative.” There will be two compensating days off for the evening exams: Thursday, 15 April and Thursday, 22 April; I do confirm these dates because I am aware that being able to plan one’s schedule is highly desirable. At his discretion the instructor might will add short quizzes on the assigned reading if he believes doing so will improve the level of class participation. The short quizzes could count for as much as 5 % of the total course grade.
Exams will be returned to you with a grade based on the standard “10-point scale”: 100 – 90 is A performance, 89 – 80 is B performance, etc.; in this way you will be able to exactly monitor your progress. Attendance will from time to time be taken; it will not directly affect your grade—indirectly, however, may well be a wholly different matter.
Read the syllabus, skim the readings, anticipate the periods of heavy work.
This syllabus may be altered as appropriate and with due prior notice.
Class Topic
1. Introduction, “Peeling the Onion”
Production Possibilities
P. Krugman, “What do Undergraduates Need to Know about Trade?,” American Economic Review, May 1993, 23 – 26. [see web page]
2. Production
Markusen, et al. Chapter 2. [MMKM: 2]
Irwin, Introduction, Chapter 1.
3. Preferences and Demand
MMKM: 3.
4. General Equilibrium
MMKM: 4.
Economics 441/541 Syllabus Spring 2010. p. 3.
Class Topic
5. GE: Offer Curves
MMKM: 4; Appendix 2.
6. Gains from Trade
MMKM: 5.
7. Causes and Effects of Trade: the Ricardian Model
MMKM: 6, 7.
Handouts (via instructor’s web page)
8. Ricardo (continued)
9. Causes of Trade: Heckscher-Ohlin-Vanek Model
MMKM: 8.1 – 8.4, Appendix 3.
10. Effects of Trade: H – O – V Model: Factor Price Equalization
MMKM: 8.5, 8.6, 8.7;
P. A. Samuelson, “International Trade and the Equalisation of Factor
Prices,” The Economic Journal, 58. June 1948, 163-184
P. A. Samuelson, “International Factor-Price Equalisation Once Again,”
The Economic Journal, 59, June 1949, 181-197 [optional]
11. Effects of Trade: H – O – V Model
W. F. Stolper and P. A. Samuelson, “Protection and Real Wages,” The
Review of Economic Studies, 9, Nov. 1941, 58-73
T. M. Rybczynski, “Factor Endowments and Relative Commodity Prices,”
Economica, N. S., 22, Nov. 1955, 336-341. [have you spotted the
error?]
12. Specific Factors Model
MMKM: 9, Appendix 4 (optional).
13. Government Policies as Determinants of Trade
MMKM: 10.
14. Imperfect Competition
MMKM: 11.
15. Imperfect Competition, Increasing Returns to Scale
(March 16) MMKM: 11, 12.
16. Increasing Returns to Scale and Intertemporal Trade
(March 18) MMKM: 12, 23
Economics 441/541 Syllabus Spring 2010. p. 4.
Class Topic
17. Tastes, Incomes, and Product Cycle
(March 23) MMKM: 13,
Irwin: Chapter 3: Protectionism.
Raymond Vernon, International Investment and International Trade in the Product Cycle,” Quarterly Journal of Economics, 80 (2) May, 1966, 190-207. [this is covered in text in chpt. 14]
18. Empirical Studies
(March 25) MMKM: 14,
D. Irwin, “Explaining America's Surge in Manufactured Exports, 1880-1913,” Review of Economics and Statistics, 85 ( 2), May, 2003, 364-76.
The following is optional:
G. Wright, “The Origins of American Industrial Success, 1879 – 1940”
American Economic Review, 80 ( 4), September 1990, 651-68.
19. Gravity Models
(March 30) J. A. Frankel, “Importance of Geographical Proximity in Trade,” and “The Gravity Model of Bilateral Trade,” being chapters 3 and 4, respectively, pp. 35 – 48 and pp.49 – 76, in Frankel, Regional Trading Blocs, Washington: Institute for International Economics, 1997.
20. Network Effects in Trade
(April 1) Read one of the following two articles:
J. E. Rauch, “Business and Social Networks in International Trade,” Journal of Economic Literature, 39, December 2001, 1177 – 1203.
or
E. E. Leamer, “A Flat World, a Level Playing Field, a Small World After All, or None of the Above? A Review of Thomas L. Friedman’s The World is Flat,” Journal of Economic Literature, Vol. 45 (March 2007), 83–126.
The following is optional:
J. A. Dunlevy, and W. K. Hutchinson, “The Impact of Immigration on American Import Trade in the Late Nineteenth and Early Twentieth Century,” Journal of Economic History, 59, December 1999, 1043 – 1062.
21. Tariffs
(April 6) MMKM: 15.
Irwin, Chapter 4: Jobs and Income Distribution
Handouts: examples of current American Tariff Structure, Link to US International Trade Commission web page: http://www.usitc.gov/
Economics 441/541 Syllabus Spring 2010. p. 5.
Class Topic
22. Non Tariff Barriers
(April 8) MMKM: 16.
23. NTB (continued)
(April 13) MMKM: 16.
24. Strategic Trade Policy
(April 20) MMKM: 17.
Irwin, Chapter 5: Antidumping and Escape Clause
Handouts (from The Economist).
25. Preferential Trading Arrangements
(April 27) MMKM: 18.
Irwin, Chapter 7: WTO, Regional Agreements