Theory of Economic Integration 2400-ICU2TEI
Course outline:
1. Descriptive background (4 h)
What is economic integration
- Definition and significance
- The stages of economic integration
Preferential Trading Areas in world economy
- WTO rules
- Preferential Trade Agreements and the Multilateral Trade System
Basic Principles of EU & Institutions
- Post-War economic integration in Western Europe
- The decision-making institutions of the EU
- The budget of the EU
Main readings
Baldwin and Wyplosz: ch. 1-3
Dyker D. ch. 2, 3, 4
Hiritis T. ch. 1, 2, 4
McDonald F., Dearden S. ch.1, 4
Pelkmans ch. 1-4
2. Product-market integration in a neoclassical world (6h)
- Analysis of discriminatory liberalization
- Analysis of a free trade agreements
- Analysis of a custom union
- Empirical evidence
- Creation and diversion effects in empirical studies
- Estimated Effects of Trading Blocks
Main readings:
Baldwin, Wyplosz., ch. 5
Pelkmans ch. 5-6
3. Market Size and Scale Effects (4h)
"New Trade Theory": Increasing Returns and Imperfect Competition
- Monopoly, international duopoly, and the gains from trade through increasing competition
- Monopolistic competition and the gains from trade through increasing product variety
"New Economic Geography": Externalities and Agglomeration Economies
- The "core-periphery" model
- Welfare effects and multiple locations
- Empirical evidence on location patterns in the European Union
Terms of Trade Effects
Main readings
Baldwin Richard, Charles Wyplosz. ch. 6
Dierx A., Ilzkovitz F., Sekkat K. Ch. 3-5
Dyker ch.9
4. Microeconomics of Factor Market Integration (6h)
- Essential theory
- Single European Market
- Empirical studies
- The 1996 Review of the Single European Market programme
- Evidence of the effects of the SEM since 1996
Main readings
Baldwin Richard, Charles Wyplosz. 2004. ch. 7.4-5
Pelkmans ch. 6.6-7, 9-10
McDonald F., Dearden S. ch. 1
Dyker D. Ch. 5-6
Hitiris ch. 3
5. Macroeconomic issues (4h)
- European Macroeconomic cooperation
- Growth Effects
- Product market reforms and the macroeconomic performance
Main readings
Baldwin Richard, Charles Wyplosz. ch. 7.1-7.3
Dierx A., Ilzkovitz F., Sekkat K. ch. 6-8
Pelkmans ch. 16
Dyker ch.7
6. Monetary integration (6h)
- A Costs of a common currency
- Theory of Optimum Currency Areas
- Costs and benefits compared
- European Monetary System
- European Central Bank
- European Monetary Policy
Main readings:
Baldwin & Wyplocz ch. 10, 12, 13, 14
Eijffinger & de Haan ch. 1-3
Artis and Nixson ch. 12
De Grauwe ch 1, 2, 3, 5, 7, 8
Pelkmans ch. 16, 17
Type of course
Prerequisites (description)
Course coordinators
Learning outcomes
After finishing the course, the student:
In terms of knowledge:
- Knows and understands how to properly analyze the causes and course of processes taking place currently in the framework of European integration (S2A_U03);
- Knows and understands the mechanisms accompanying the integration processes (S2A_W09);
- Knows and understands how to analyze integration processes taking place in the European Union (S2A_U06);
- Knows and understands the theories of economic integration (S2A_U02);
- Knows and understands how to prepare oral presentations on processes related to the European integration (S2A_U10);
In terms of skill:
- Can apply the methods to study related causal mechanisms;
- Can synthesize an analysis on this topic.
In terms of competencies:
- Demonstrates responsibility and self-control through learning experiences in a variety of learning methods;
- Able to self-organize and do independent work;
Assessment criteria
Passing the course will be based on a written test covering material discussed in class (60%) and a presentation of a research paper selected by the student (40%).
At least 50% of the grade is required to pass.
Grading scale:
[0%-50%) - no pass
[50%-60%) - 3.0
[60%-70%) - 3.5
[70%-80%) - 4.0
[80%-90%) - 4.5
[90%-100%] - 5.0
Subject outcomes linked to major/specialization outcomes (marked with curriculum codes):
KW01, KW02, KW03, KW04, KW05, KU01, KU02, KU03, KU04, KU05, KU06, KU07, KK01, KK02, KK03
Bibliography
The course does not follow a unique textbook, but it draws on the following titles:
- Baldwin, Richard and Wyplosz, Charles 2004 "The Economics of European Integration", McGraw-Hill (lecture slides http://hei.unige.ch/~baldwin/PapersBooks/BW/slides.htm)
- De Grauwe 2003 "Economics of Monetary Union" (5th ed) Oxford
- Dierx A., Ilzkovitz F., Sekkat K. (2005) "European Integration And The Functioning Of Product Markets" Edward Elgar
- Dyker D. 1999 "The European Economy", Longman
- Eijffinger & de Haan 2000 "European Monetary and Fiscal Policy", Oxford
- Hiritis T. 2003 "European Union Economics" Prentice Hall
- McDonald F., Dearden S. 2005 "European Economic Integration", Prentice Hall
- Pelkmans 2001 "European Integration" 2nd ed FT Prentice Hall
Recommended textbooks:
- Hansen, J.D. and Nielsen, J.U. 1997 "An Economic Analysis of the EU", 2nd edition, McGraw-Hill.
- Molle, Willem 2001 "The Economics of European Integration", 4th edition
Additional information
Additional information (registration calendar, class conductors, localization and schedules of classes), might be available in the USOSweb system: