Syllabus
More detailed information, as well as handouts, data files or additional materials for the lectures and seminars, will be gradually published via the Moodle system. Basic introduction to the use of the Moodle system will be provided during the first session.
Topics that will be discussed during the lectures/seminars:
Introduction. Trade data and trends.
Model of comparative advantage (Ricardo) and its extensions.
Neoclassical models - the role of differences in factor endowments. Specific factor model.
Heckscher-Ohlin model: derivation of the Leamer diagram. Stolper-Samuelson theorem. Factor Price equalization. Rybczynski theorem.
Empirical tests of trade theory. Leontief paradox. Intra-industry trade. Alternative theories of international trade (Product cycles, Linder's overlapping demands).
New theory of international trade: Krugman model with monopolistic competition and increasing returns to scale.
Introduction to the "New new" theory - models with heterogeneous firms (Melitz).
Introduction to the New Economic Geography (NEG)
Trade policy: basic instruments, partial equilibrium models.
Trade policy: general equilibrium, large country issues.
Economic integration: customs unions and free trade areas. Trade creation and trade diversion effects.
Models with mobility of factors of production.
Current issues in international trade.
Annotation
This course covers, with a focus on both theory and empirics, basic topics in international (interregional) trade at undergraduate level. The course does not deal with international business methods (logistics, use of letters of credits etc.); instead it focuses on trade theory and trade policy analysis and attempts to provide some insight into the following questions:
• Why do countries (regions) trade?
• What determines which goods will be exported/imported by particular countries?
• How does trade influence welfare?
• How do trade policies influence effects of trade on economies, can they improve effects of trade on welfare?
In short, we will analyze the benefits of trading and the causes (and effects) of specialisation, and development of theoretical opinions on these issues. Next, we will review the policy instruments (tariffs, quotas, subsidies, anti-dumping measures, as well as very popular schemes for preferential treatment, i.e. customs unions, free trade areas) and options available to those who would want to analyze the effects of trade policies.
While the course resembles standard courses in International Trade Theory as taught at many other undergraduate economic programmes, we are trying to provide a bit deeper insight by including more recent advances in trade theory (models with heterogenous firms or New Economic Geography) as well as emphasis on methods useable for empirical analysis (introduction into the correct use of gravity models, brief introduction into trade policy modelling).
Please check the Moodle web for all additional information on the course (as well as for handouts and additional reading for all the lectures and seminars). The Moodle access details will be shared with all registered students at the beginning of the semester.