Bachelor 2020/2021

International Trade

Type: Elective course (Economics)

Area of studies: Economics

Delivered by: Department of Theoretical Economics

Where: Faculty of Economic Sciences

When: 3 year, 1, 2 module

Mode of studies: distance learning

Instructors: Alexander Tarasov

Language: English

ECTS credits: 5

Contact hours: 60

Course Syllabus

Abstract

The course will be taught online via zoom. The link to the lectures will be distributed each week closer to the date of the corresponding lecture. The platform for the course webpage is Piazza. Please, send an email to Alexander Tarasov to be signed up. All the materials (including zoom links) will be uploaded there. The purpose of this course is to introduce students into the classical and modern theories of international trade. In particular, I am going to address three main questions: (i) What are the patterns of trade we observe in the real world (who sells what to whom?) and how can we explain them? (ii) If international trade is welfare improving, can we say something about the magnitude of these gains from trade? (iii) What is the effect of different trade policies on country’s welfare? The course will be divided into several parts. In the first part, we will study the classical trade theories based on the principle of a comparative advantage, which is originated to Ricardo. In the second part, we will talk about the, so called, new trade theory that was developed by Paul Krugman (he won a Nobel Prize for this theory) and, then, Elhanan Helpman among others. The third part will be devoted to the analysis of various instruments of trade policy under different assumptions for the market structure. We will try to understand which policy is beneficial for country’s welfare and in which cases. In the fourth part, we will try to understand the magnitude of the welfare gains. This part of the course will be based on recent seminal trade papers. Specifically, we will focus on the quantitative macro approach to understanding the size of the gains from trade. In addition, we consider a study based on a trade natural experiment. There will be also a part of the course that you will study on your own using the online course on International Trade (which is specified later). Finally, we will discuss some assorted topics in trade.

Learning Objectives

• to prepare students for future careers in policy and research that require understanding of the global economic processes
• to develop a critical understanding of economic theory, empirical evidence and key phenomena relevant to the role of international trade in a globalized world
• to introduce the key models economists use to think about international trade and build understanding through math, graphs and economic intuition
• to confront the discussed models with empirical data and anecdotal evidence

Expected Learning Outcomes

• be familiar with the main trade models that explain trade between different countries
• be familiar with the Krugman model that explains trade between similar countries
• understanding the approaches used to measure the gains from trade
• understanding the implications of different trade policies for economic well-being of different agents: consumers, firms, the government
• understanding the role of multinational companies, foreign direct investment, international offshoring in a globalized world
• develop critical thinking about economic matters related to international trade

Course Contents

• Comparative Advantage and Trade
  The role of differences in technologies and factor endowments in explaining trade patterns.
• Increasing Returns To Scale and Trade
  The role of increasing returns to scale in explaining trade patterns and volumes
• The Magnitude of the Gains from Trade
  We will try to understand what the size of the gains from trade can be.
• International Trade Policy Under Perfect Competition
  The effects of different policies on welfare in a perfectly competititve enviroment
• Different Consequences of International Trade
  Here we explore different consequences of international trade on some developing countries such as Mexico, India, Bangladesh.
• Assorted Topics in International Trade

Assessment Elements

• Homeworks
• Midterm test
• Final test
  remote format in zoom
• Homeworks
• Midterm test
• Final test

Interim Assessment

• Interim assessment (2 module)
  0.53 * Final test + 0.18 * Homeworks + 0.29 * Midterm test

Bibliography

Recommended Core Bibliography

• International economics : theory and policy, Krugman, P. R., 1997
• International economics : theory and policy, Krugman, P. R., 2015
• Robert C. Feenstra. (2015). Advanced International Trade: Theory and Evidence Second Edition. Princeton University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.pup.pbooks.10615

Recommended Additional Bibliography

• Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2018). International Economics: Theory and Policy, Global Edition (Vol. Eleventh edition). New York: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1649946