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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.

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
    • Aficionado?
      • Kevin O'Rourke and Jeffrey Williamson. Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy, MIT Press.
  2. The balance of payments: accountability and global (im)balances – Print
  3. Ricardo: productivity and the comparative advantage – Print
  4. Heckscher, Ohlin and Samuelson: trade and wages – Print
  5. Monopolistic competition and international trade between similar countries – Print
  6. Gravity as a tool for measuring integration – Print
  7. Multinational Firms– Print