International Economics

INTRODUCTION TO THE COURSE
International economics is divided into two broad subfields: international trade and international money. International trade focuses on real transactions in the international economy, that is, on those transactions that involve a physical movement of goods. On the other hand, international money focuses on financial transactions and refers to the monetaryside of the international economy. This course deals with the first aspect of international economics, i.e. the real transactions and focuses on two main aspects of it: international trade theory and evidence and international trade policy.

CONTENTS

Chapter 1. Introduction
What Is International Economics About?
International Economics: Trade and Money

Part I. International Trade Theory

Chapter 2. World Trade: An Overview
Who Trades with Whom?
The Changing Pattern of World Trade
Do Old Rules Still Apply?

Chapter 3. Labor Productivity and Comparative Advantage: The Ricardian Model
The Concept of Comparative Advantage
A One-Factor Economy
Trade in a One-Factor World
Misconceptions About Comparative Advantage
Comparative Advantage with Many Goods
Adding Transport Costs and Nontraded Goods
Empirical Evidence on the Ricardian Model

Chapter 4. Resources, Comparative Advantage, and Income Distribution
A Model of a Two-Factor Economy
Effects of International Trade Between Two-Factor Economies
The Political Economy of Trade: A Preliminary View
Empirical Evidence on the Heckscher-Ohlin Model

Chapter 5. The Standard Trade Model
A Standard Model of a Trading Economy
International Transfers of Income: Shifting of the RD Curve
Tariffs and Export Subsidies: Simultaneous Shifts in RS and RD

Chapter 6. Economies of Scale, Imperfect Competition, and International Trade
Economies of Scale and International Trade: An Overview
Economies of Scale and Market Structure
The Theory of Imperfect Competition
Monopolistic Competition and Trade Dumping
The Theory of External Economies
External Economies and International Trade
Economic Geography and Interregional Trade

Chapter 7. International Factor Movements
International Labor Mobility
International Borrowing and Lending
Direct Foreign Investment and Multinational Firms

Part II. International Trade Policy

Chapter 8. The Instruments of Trade Policy
Basic Tariff Analysis
Costs and Benefits of a Tariff
Other Instruments of Trade Policy
The Effects of Trade Policy: A Summary

Chapter 9. The Political Economy of Trade Policy
The Case for Free Trade
National Welfare Arguments Against Free Trade
Income Distribution and Trade Policy
International Negotiations and Trade Policy
The Doha Disappointment

Chapter 10. Trade Policy in Developing Countries
Import-Substituting Industrialization
Results of Favoring Manufacturing: Problems of Import-Substituting Industrialization
Trade Liberalization Since 1985
Export-Oriented Industrialization: The East Asian Miracle

Chapter 11. Controversies in Trade Policy
Sophisticated Arguments for Activist Trade Policy
Globalization and Low-Wage Labor
Globalization and the Environment

GRADING
Mid-term exam (30%): to be written in class.
Homeworks (20%): During the course there will be two assignments about some of the topics discussed in class.
Final Exam (50%): to be written in class.