Theory of Economic Integration 2400-ICU2TEI
The course is designed for students with a solid background in international economic theory.
The specific student learning outcomes and experiences are:
- to understand the development and workings of the EC/EU and other PTAs;
- to become familiar with the key literature on economic integration.
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
Course coordinators
Term 2023L: | Term 2024L: |
Learning outcomes
Student is able to properly analyze the causes and course of processes taking place currently in the framework of European integration S2A_U03
Student has in-depth knowledge of the mechanisms accompanying the integration processes S2A_W09
Student has the ability to use the acquired knowledge to analyze processes taking place in the European Union S2A_U06
Student understands theories of integration S2A_U02
Student has an in-depth ability to prepare oral presentations on processes EU integration of the EU S2A_U10
Assessment criteria
Passing the lecture will be based on the oral exam. During the exam students will receive two open questions. In addition, students elaborate the article selected by the teacher. Grade will be issued solely on the basis of the answers to the exam and the written work based on the article.
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: