International Economics (in English)

Course description
Nothing illustrates better than the COVID-19 pandemic how movements of people, flows of data, and commerce connect our interdependent world. Because pathogens do not respect national borders, the SARS-CoV-2 virus caused a global economic shock and a worldwide downturn, sending governments throughout the world scrambling for policies to stop the spread of the disease while supporting their economies. Many lessons will be drawn from the recent pandemic experience, but one is the importance of an international perspective for analyzing events of worldwide economic significance and countries’ responses (Krugman et Alia, 2022).

Never has the study of international economics been as crucial to understanding the real world as it is today. At the outset of the XXI century, countries find themselves far more closely integrated, from any point of view, than they have ever been before. Over the last decade, the global economy has posed many new aspects, from the reaction arisen against globalization to the unprecedented financial crises occurred in the beginning of the XXI century. This course is intended for the student to become familiar with the most relevant concepts and methods of analysis in the field of international economics and for him/her to be able to carry out a rigorous analysis of the main phenomena coming about in the current global economy.

Over his/her professional career, the average student will have to make decisions within the economic environment in which the firm operates. Hence, it is essential that he/she understands and knows how to deal with the economic atmosphere in which the firm is inserted. For that reason, he/she needs to acquire a set of knowledge competences, as well as those having to do with capacities and attitudes concerning the analysis of economic relations among the distinct economic agents: consumers, firms and the government. The course “International Economics” belongs to the set of courses that addresses these relationships.

The study of international trade and finance has always been an active and controversial strand of economics. The majority of the key reflections that the modern economic analysis allows for stem from the debates over international trade and monetary policy that took place in XVIII and XIX centuries. Notwithstanding, never before has the study of international trade been more important than it is today. Through the international trade of goods and services and the international money flows, economies all over the world are more closely integrated than ever before. At the same time, the world economy is going through a very unique turbulent period. Keeping up with the changes occurring  in the world economy greatly concerns firms and governments in shaping their strategies and economic policies.

International economics involves new and different concerns since international trade and foreign investment take place among independent nations. That is why a special analysis of the international economic relations, by using different tools and theories, needs to be undertaken. As far as the firm is concerned, this is a fundamental task in the current economic environment characterized by the occurrence of globalization and the processes of economic integration, like the European Union. This course represents the highest possible level attained by students within this set of economics courses. This course in turns provides the student with a basic background to go deeper into the international dimension of the firm at a graduate level. As regards students’ professional careers, its main interest lies in the possibility of students receiving a bunch of abilities in order for them to get a good grasp of how the business activity works in the current economic environment within which international economic relations become essential.

Course Goals and Methodology
The purpose of this course is to equip students with intellectual tools for understanding the economic implications of global interdependence. This course “International Economics” will introduce students to both classical and modern theories of international trade in goods and services, as well as to the basics of international macroeconomics. A lot of attention will be devoted to applying these frameworks to real-world economies. In addition to studying these basic theoretical models, we will also see how these models behave empirically. To be more concrete, the main objectives of this course are:
1. Enhance the comprehension of the general economic framework from an international viewpoint.
2. Provide the fundamental tools for analyzing the global economy.
3. Delve deeper in the main features of the world economy. As regards methodology, this course follows the same approach as other branches of economics, namely, abstract reasoning mainly consisting of graphical analysis (although the analytical approach will be used when necessary), as well as the study of empirical evidence and the real world through country cases and applications. So we will first see the main models that are well accepted in the literature and that are suitable for a course like this, and will then examine whether their predictions hold empirically.

Learning Objectives
At the conclusion of this course students will:
1. Know the main theories that account for the trade relations among countries.
2. Know the main trade policy's main tools.
3. Know the most basic theories which explain the determination of the nominal exchange rate.
4. Know the main concepts and tools used to analyze an open economy.
 

Required Texts
Krugman, P. et al. (2022): International Economics: Theory and Policy (12th or recent editions, Pearson).
Recommended Texts
Feenstra, R. and Taylor, A. (2015): International Economics (2nd Edition, Worth Publishers).
Markusen, Melvin, Kaempfer and Maskus (1994): International Trade: Theory and Evidence (http://spot.colorado.edu/~markusen/textbook.html).
• Salvatore, D. (2013): International Economics (13th Edition, Wiley).
• Van Marrewijk, C. (2012): International Economics (2nd Edition, OUP).+
• Some articles and readings will be provided by the teacher during the course.

WEBS:
 • www.economist.com - analytical articles on world economic/political affairs
• www.ft.com – Financial Times, international news, economy, corporate activities, shares
• www.guardian.co.uk - UK daily, broad range of national/international news articles
• www.ictsd.org - International Centre for Trade and Sustainable Development
• www.imf.org - International Monetary Fund
• www.nytimes.com - World news, critical editorials
• www.unctad.org - United Nations Conference on Trade and Development
• www.worldbank.org/ - World Bank
• www.wto.org/ - World Trade Organization

Course Requirements and Grading
Assessment for the course consists of two written exams (a MIDTERM and a FINAL), and also a portfolio. Participation will also be taken into account. As part of formative assessment, students must elaborate a portfolio (individually) that will consist in a collection of the student´s class notes with the main objective of evaluating the student´s understanding of the course. This project should be written by hand and the following will be assessed:
- The content of the project must be adjusted to the issues of the course.
- Clarity both in writing and in mathematical and graphic expressions.
- Adequate structure. - Coherency and consistency in the way the notes are written.

As of PARTICIPATION, students will be required to complete reading activities, summarize articles outside the class and to actively participate in class discussions. Just attending to class does not count as participation. The distribution of the final grade is the following:
• Midterm Exam 20%
• Portfolio 30%
• Final Exam 30%
• Participation 20%

Course Contents
International trade
Unit 1: Introduction
Unit 2: The Ricardian model
Unit 3: The Specific Factor Model: International labor mobility
Unit 4: The Heckscher-Ohlin model
Unit 5: The Standard trade model Centro Universitario Internacional
Unit 6: Trade and economies of scale
Unit 7: The Instruments of trade policy
International Macroeconomics (TIME PERMITTING)
Unit 8: Basics of open economies.