International Trade 2105-EPE-L-D2INTR
Detailed programme:
2-nd semester: International trade: lecture for WNPiSM
1. World economy:
Trade flows, major trading nations, trade openness, gains from trade, global value chains (GVC’s), globalization, gravity model
Lit.: K&O.: chap 1&2.
2. Classical trade theory: Ricardo & Smith
Model assumptions, geometric presentation, terms of trade, absolute and comparative advantage, model with many goods, relative wages.
Lit.: K&O.: chap. 3:,
3. Classical trade theory: Heckscher-Ohlin (H-O) Model: Factor specific model
Factor specific model (3 factors ), assumptions, structure of the model, productivity of factor and their remunerations, Haberler theorem, production possibility frontier (PPF), gains form trade.
Lit: K&O.: chap. 4:,
4. Neo-classical H-O model (2x2x2)
H-O assumptions, production structure, factor abundance, firm equilibrium, H-O theorem, Stolper-Samuelson the, the equilibrium of firms, Factor Price Equalization theorem, gains from trade. Rybczynski theorem,
Lit: K&O: chap. 4 & 5
5. Neoclassical model continued and Leontieff paradox
empirical verification of H-O model: Leontieff paradox interpreted, other alternative (neo-technological) trade theories
Lit: K&O: chap. 6
6. Intra-industry trade: imperfect competition and increasing returns to scale (IRS)
Empirical analysis of Grubel-Lloyd, Dixit-Stiglitz (love for variety) demand function, Brander-Krugman model: reciprocal dumping.
Lit ChM, chap. 9
7. Krugman model
Krugman model (1979), the role of IRS, product differentiation and imperfect competition, new trends, heterogeneous firms in the context Melitz Model.
Lit.: K&O: chap. 8.
8. Empirical analysis of inter-industry and intra-industry trade flows.
Empirical analysis of inter-industry trade and intra-industry trade flows, determinants of firms’ exports
Lit. ChM, chap. 10
9. trade policy in perfect competition: Tariffs
Tariff analysis: partial equilibrium approach: small and large country, general equilibrium effects, optimal tariff, infant-industry argument, tariffs and market imperfections.
Lit.: K&O, chap. 9 & 11
10. Trade policy: non-tariff measures (NTMs)
Tariff in imperfect competition, quantitative restrictions (QRs), Tariff and QRs equivalency, Voluntary export restrains (VERs)
Lit.: K&O, chap. 9 continued
11. Trade policy: non-tariff measures (NTMs): subsidies and AD measures
Production and export subsidies under perfect competition, Countervailing duties, dumping and AD duties, agricultural subsidies
Lit.:, K&O, chap. 11 continued & ChM cap. 8
12. Strategic trade policy
Strategic trade policy: basic concepts and examples, Brander-Spencer model (Cournot competition) & Eaton-Grossman model (Bertrand competition)
Lit: K&O: chap. 12 and ChM: chap. 11
13. Political economy of trade policy continued
Findlay-Wellisz neo-classical model of political economy, tariff formation function, sketch of Protection for sale model
Lit.: K&O chap. 10,, Findlay, Wellisz: Endogenous Tariff, the Political Economy of Trade Restrictions and Welfare”
14. Framework for international trade policy: World Trade Organization (WTO)
Basic rules of GATT/WTO system. The importance of non-discrimination and national treatment, prohibition of QRs, multilateral system of trade negotiations, threats to multilateral trade system: risk of raising protectionism and trade wars.
Lit.: ChM: chap 12, K&O chap. 12.2
Type of course
Mode
Prerequisites (description)
Course coordinators
Learning outcomes
The students will be able to explain what are the sources and implications of international trade flows, in the context of neoclassical and new trade theories. They will also understand the effects of the functioning of main trade policy instruments in the perfect and imperfect competition framework.
Assessment criteria
Students participating in the classes shall have basic knowledge in the microeconomics I. The grading will be based on a written multiple-choice test, with several open questions. The classes (labs) are accompanying the lecture on International Trade (30 hours). All students shall pass the labs in international economics before staring the final exam.
Practical placement
No
Additional information
Additional information (registration calendar, class conductors, localization and schedules of classes), might be available in the USOSweb system: