International Trade (L3)
This course will provide students with the analytical tools that are essential to understand the process of globalization through the international trade in goods. Lectures will focus on the key topics that are at the center of the policy debate: why do countries open to trade? What are the effects of free trade on the process of economic development and inequality? Why do countries restrict the exchange of goods, and what can we say about the effects of protectionism on trade and welfare?
At the end of the course, students are expected to have a good knowledge of the mechanisms and predictions from the traditional models of trade, and from the New Trade Theory. Students will also be able to read simple research articles that can be used for the writing of policy notes.
The lectures will be organized as follows: the lectures will be designed to treat the main topics of the course. The first part of the course will give an overview of the main theories in international trade. The second part of the course covers gravity equations as a tool for analyzing trade integration, and economic geography that has been an important component of recent international economic analysis. Two important research topics will close the lecture: how globalization affects military conflicts and cultural patterns.
Grades are based a tutorial exam (50%) and a final exam (50%).
Main textbook and additional readings
Feenstra R.C., Taylor A., (2008). International Economics. Worth Publisher, 2nd Ed. Krugman P., Obstfeld M., and Melitz M., (2008). International Economics: Theory and Policy. Pearson, 9th Ed.
Combes P.P, Mayer T. and J., Thisse (2008) Economic Geography, Princeton University Press
Additional reading may complete the K-O-M and CMT chapters and will be provided before the lectures. Feenstra provides an advanced lecture for aficionados.
Feenstra (2009). Advanced International Trade: Theory and Evidence. Princeton University Press.
Telos and Vox are two blogs that publish research-based policy articles from leading economists. A lot of the articles cover trade-related topics.
Chapters of the course
- Globalization: some historical perspective – Print
- F-T Chapter 1: "Trade in the Global Economy"
- K-O-M chapter 2: “World trade, an overview”
- Baldwin, R. And Martin, P. (1999): “Two waves of globalization: superficial similarities, fundamental differences”, NBER Working Paper 6904
- Kevin O'Rourke and Jeffrey Williamson. Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy, MIT Press.
- Ricardo: productivity and the comparative advantage – Print
- Heckscher, Ohlin and Samuelson: trade and wages – Print
Monopolistic competition and international trade between similar countries – Print
- F-T chapter 3: "Trade and Resources: The Heckscher-Ohlin Model"
- K-O-M chapter 4: "Resources, comparative advantage, and income distribution"
- Paul Krugman: "Trade and inequality, revisited", Vox 15th June 2007
- Hervé Boulhol : « Mondialisation et inégalités : le débat continue », Telos 23 june 2008
- Alan S. Blinder : "On the measurability of offshoring", Vox 9 October 2009
- Avraham Ebenstein, Ann Harrison, Margaret McMillan and Shannon Phillips, "International trade, offshoring and US wages", Vox 31 August 2009
- Feenstra, Chapter 2
- C., Brown and D., Bernhofen (2004). A direct test of the theory of comparative advantage: the case of Japan, Journal of Political Economy 112(1), pp. 48-67.
Gravity as a tool for measuring integration – Print
Multinational Firms– Print
- F-T: Chapter 6: "Increasing Returns to Scale and Monopolistic Competition"
- K-O-M chapter 6: "Economies of Scale, Imperfect Competition and International Trade"
- Philippe Martin, Thierry Mayer et Florian Mayneris, "Natural clusters: why policies promoting agglomeration are unnecessary?", Vox 4th July 2008
- Lionel Fontagné, Michael Freudenberg et Guillaume Gaulier , “Disentangling horizontal and vertical intra-industry trade”, CEPII Working Paper N.2005-10
- Feenstra, Chapter 2 & Chapter 10
- Christian Broda and David Weinsteinn, 2006. Globalization and the Gain from Trade. Quarterly Journal of Economics, 121: 541-585.
- K-O-M chapter 8 : “Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises”
- Antràs, P., and S.R. Yeaple. 2014. Multinational Firms and the Structure of International Trade. Handbook of International Economics, 4:55-130, 4, 55-130. (Appendix)
- Rodriguez-Clare, A., Ramondo N. and F. Tintelnot 2015. Multinational Production: Data and Stylized Facts. American Economic Review, Paper and Proceedings, 105(5):530-36. (data documentation and data)