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Regular version of the site
Bachelor 2022/2023

International Economics

Area of studies: Economics
When: 4 year, 1-4 module
Mode of studies: distance learning
Online hours: 64
Open to: students of one campus
Instructors: Natalia Kogutovskaya, Konstantin K. Kozlov, Roman Zakharenko
Language: English
ECTS credits: 10
Contact hours: 112

Course Syllabus


The main goal of the first part course is to introduce students to both classical and modern theories of international trade in goods and services, as well as empirical research on trade. A substantial fraction of the course is dedicated to examination of efficient trade policies. The main goal of the second part of the course is to introduce students to introductory level of theories of international finance flows, determination of interest and exchange rates in interconnected economies, macroeconomic policies available to the government, and the nature of financial crises. Prerequisites: Microeconomics 1-2, macroeconomics 1-2, calculus
Learning Objectives

Learning Objectives

  • Upon successful completion of the course, you should be able to discuss and explain economic forces that drive international trade, as well as welfare effects of various trade policies
  • able to discuss and explain economic forces that drive international finance flows.
  • able to apply economic models to analyze recent trends in global trade and international finance including the case of Russian economy
Expected Learning Outcomes

Expected Learning Outcomes

  • : Explain how factor prices converge due to international factor movements, explain FDI and its effects for both home and host countries.
  • : Explain the strategic trade policies under Cournot and Bertrand competition model settings.
  • Analyze similar effects of the import tariff and export tax, welfare gains for a large country from an import tariff.
  • Analyze the political economy models of protection, how protectionist policies exist in the democratic societies.
  • assess the factors driving the equilibrium on the foreign exchange market, the role of interest rates and the expectations about the future exchange rate
  • construct the expenditure side Keynesian model of the real sector; analyze the effects of monetary and fiscal policies on the real economy and monetary variables under flexible exchange rate regime; decide on the appropriate macro policy options in response to the state of the economy
  • Discuss the concept of intra-industry trade and why it is not explained by traditional trade models, analyze the internal and external economies of scale and different models of trade based on this concept.
  • evaluate the pros and cons of global monetary systems used in the XX century; analyze the restrictions each system places on the monetary and fiscal policies
  • explain how international capital markets provide gains from trade in financial assets; outline the rough structure of global financial markets, the leading countries, currencies and types of transactions; analyze the problems that international finance (mainly banking) is facing in recent years; decide on the direction of international cooperation needed to solve those problems.
  • explain the factors behind price indices behavior and their connection with the external sector, analyze the long-run dynamics of the real exchange rate behavior using a range of models
  • explain the relevance of international macroeconomics in the modern global economy and Russia in particular
  • explain the role of money and banking in an economy; construct the model of money and foreign exchange markets in the short run; explain and analyze the effects of monetary policy on the interest rates, exchange rates and expectations
  • explain the role of the central bank as a price-setting actor on the foreign exchange market; analyze the effects of monetary and fiscal policies on the real economy and monetary variables under fixed exchange rate regime, outline the factors behind the emergence of currency crises phenomena
  • explain the theoretical underpinnings of the most prominent currency crises of the last decades; decide on the driving factors of the observed currency crises
  • identify the main parts of national accounts and their connection with the external sector dynamics, outline the key factors behind the balance of payments formation
  • Understand the general international trade concepts such as Why do countries trade? What are the gains from trade? What is the pattern of international trade, analyze recent Russian and international trade statistics
  • Explain the concept of comparative advantage (CA) in comparison to absolute advantage, how it determines the pattern of specialization and trade, the gains from trade and relative productivities-relative wages relationship. Discuss CA in the real world.
  • Explain how differences in factor endowments can provide the basis for international trade, explain general effects of trade on income distribution, analyze the economic growth
  • Define the effects of trade liberalization and protection on factor allocations, outputs and income distribution. Explain the effects of international migration.
  • Apply a specific framework to illustrate the connection between a variety of models and approaches. Explain the connections between Ricardian, Heckscher-Ohlin and the specific factors models in trade theory.
  • Use relevant diagrams to do comparative statics analysis after trade liberalization, protection, or economic growth.
  • Discuss limitations of the HO model and empirical studies of trade theory (Leontief paradox, the Case of the missing trade etc.)
  • Analyze price, quantity and welfare effects of a tariff, quota, export tax and export subsidy in partial and general equilibrium diagrammatic settings. Compare tariff and quota under perfect and imperfect competition.
  • Compare import substitutions and export oriented strategies, explain infant industry argument, discuss real life examples
  • Discuss real life examples of protectionism
  • Discuss real life examples of strategic trade policies
  • Analyze the results of export and import substitution strategies in the world economy
  • Acknowledge with the History of WTO and various PTA. Analyze Viner’s static effects of the Customs Union (CU), Cooper-Massell argument and Kemp-Wan theorem. Discuss other effects of the regional integration such as Terms of Trade (TOT) argument, interests of exporters, economies of scale effects
  • Learn historical aspects of Russian accession to WTO and international trade policy.
Course Contents

Course Contents

  • Introduction
  • Essentials: Ricardo and Comparative Advantage
  • Factor Price Equalization and Trade
  • Who Wins and Who Loses from Trade?
  • Standard Trade Models and Country Welfare
  • An Empirical Evaluation of Trade Patterns
  • Market Imperfections and Trade
  • International Factor Movements
  • Tariffs and Non-Tariff Barriers to Trade
  • Government Intervention in Trade
  • Strategic Trade Policies
  • Development through Trade Policies
  • Political Economy of Trade
  • World Trade Organization, Preferential Trading Arrangements, Custom Unions and Economic Integration
  • Introduction to international finance
  • National Income accounting revisited and the Balance of Payments
  • Asset Approach to Exchange Rate Determination
  • Money, Interest Rates, and Exchange Rates
  • Price Levels and the Exchange Rate in the Long Run
  • Output and the Exchange Rate in the Short Run
  • Fixed exchange rate regime
  • The international monetary system
  • International capital markets and emerging markets
  • Financial and economic crisis of 2008-09 and later
Assessment Elements

Assessment Elements

  • non-blocking sem 1 exam
  • non-blocking home assignments
  • non-blocking class activity
  • non-blocking mid-semester evaluation
  • non-blocking sem 2 exam
Interim Assessment

Interim Assessment

  • 2022/2023 2nd module
    0.28 * mid-semester evaluation + 0.06 * class activity + 0.16 * home assignments + 0.5 * sem 1 exam
  • 2022/2023 4th module
    0.02 * class activity + 0.25 * sem 2 exam + 0.1 * home assignments + 0.13 * mid-semester evaluation + 0.5 * 2022/2023 2nd module


Recommended Core Bibliography

  • Exchange rates and international finance, Copeland, L. S., 2014
  • Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2015). International Economics: Theory and Policy, Global Edition (Vol. Tenth edition, global edition). Boston: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=nlebk&AN=1419045

Recommended Additional Bibliography

  • International economics, Appleyard, D. R., 2001
  • International economics, Sodersten, B., 1994