Farid Toubalpac

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.

Evaluation

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.

Markusen, J. R., Melvin, J. R., Kaempfer, W. H., & Maskus, K. E. (1995). International trade: theory and evidence (pp. 281-285). New York: McGraw-Hill.

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

  1. 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.
    • Aficionado?
      • Gojko Barjamovic, Thomas Chaney, Kerem Co?ar, Ali Hortaçsu (2019). Trade, Merchants, and the Lost Cities of the Bronze Age, The Quarterly Journal of Economics, Volume 134, Issue 3, Pages 1455–1503.
      • Cécile Michel, (2008). The Old Assyrian Trade in the light of Recent Kültepe Archives. Journal of the Canadian Society for Mesopotamian Studies, 2008, pp.71-82.
  2. Ricardo: productivity and the comparative advantage – Print
    • F-T chapter 2: "Trade and Technology, The Ricardian Model"
    • K-O-M chapter 4: “Labor Productivity and Comparative Advantage: The Ricardian Model”
    • Aficionado?
      • Eaton and Kortum (2002). Technology, Geography and Trade. Econometrica, Vol. 70(5): 1741-1779
      • Costinot and Donaldson (2012). Ricardo's theory of comparative advantage: old idea, new evidence. American Economic Review, Vol. 102(3): 453-458.
    • Here an example of trade betwen U.S. and France.
  3. Heckscher, Ohlin and Samuelson: trade and wages – Print
    • F-T chapter 3: "Trade and Resources: The Heckscher-Ohlin Model"
    • K-O-M chapter 4: "Resources, comparative advantage, and income distribution"
    • Hummels, David, Jakob R. Munch, and Chong Xiang. "Offshoring and labor markets." Journal of Economic Literature 56.3 (2018): 981-1028.
    • Crozet, Matthieu, and Gianluca Orefice. "Trade and labor market: What do we know." CEPII Policy Brief 15 (2017): 2017.
    • Aficionado?
      • 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.
    • Forgot your tools of production and consumption theory: Chapter 2 and Chapter 3 of Markusen and Maskus (2011) will help. See Jim's dedicated page: https://spot.colorado.edu/~markusen/textbook.html
  4. Monopolistic competition and international trade between similar countries – 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"
    • Paul Krugman, 1980. Scale Economies, Product Differentiation and the Pattern of Trade. American Economic Review, Vol. 70, No. 5, pp. 950-959.
    • Feenstra, Chapter 2 & Chapter 10
    • Aficionado?
      • Christian Broda and David Weinsteinn, 2006. Globalization and the Gain from Trade. Quarterly Journal of Economics, 121: 541-585.
      • Bernard, A. B., Jensen, J. B., Redding, S. J., & Schott, P. K. (2018). Global firms. Journal of Economic Literature, 56(2), 565-619.
      • Feenstra, Robert C. Alternative sources of the gains from international trade: variety, creative destruction, and markups. Journal of Economic Perspectives 32.2 (2018): 25-46.
  5. The law of Gravity– Print
  6. Multinational Firms– Print