International Economics I: Topics in the theory of international trade; causes and effects of international trade, gains from trade, theory of tariffs and customs; effective protection, economic growth and trade intermediate products, optimal trade policies, factor market imperfections, theory of integration, and effects of uncertainty.
Comprehending of the causes and consequences of international trade for business acting at an international level, specific concepts such as fair trade, sustainable trade, distributional consequences of trade (inequality, structural adjustments etc.).
| Week | Topics |
|---|---|
| 1 | Introduction to International Economics --- Chapter 1: What is international economics about? International trade topics: Gains from trade, explaining patterns and volume of trade, effects of government policies on trade International finance topics: Balance of payments, exchange rate determination, international policy coordination, capital markets International trade versus finance |
| 2 | World Trade: An Overview --- Chapter 2 : Largest trading partners of the United States ; Gravity model: Influence of an economy’s size on trade; Distance, barriers, borders and other trade impediments ; Globalization: then and now ; Changing composition of trade ; Service outsourcing. Page numbers (38-51) |
| 3 | Labor Productivity and Comparative Advantage: The Ricardian Model --- Chapter 3 : Opportunity costs and comparative advantage ; A one-factor economy, the Ricardian model ; Production possibilities ; How world relative demand and supply determine the relative price after trade ; Gains from trade; Relative wages and trade ; Misconceptions about comparative advantage ; Transportation costs and non-traded goods ; Empirical evidence. Page numbers (52-78) |
| 4 | Labor Productivity and Comparative Advantage: The Ricardian Model (continue) --- Chapter 3 : Differences in the productivity of labor across countries generate comparative advantage. A country has a comparative advantage in producing a good when its opportunity cost of producing that good is lower than in other countries. Countries export goods in which they have a comparative advantage - high productivity or low wages give countries a cost advantage. Page numbers (52-78) |
| 5 | Resources, Comparative Advantage, and Income Distribution --- Chapter 4 : Substitution of factors used in the production process generates a curved PPF. When an economy produces a low quantity of a good, the opportunity cost of producing that good is low. When an economy produces a high quantity of a good, the opportunity cost of producing that good is high. When an economy produces the most value it can from its resources, the opportunity cost of producing a good equals the relative price of that good in markets. Page numbers (80-114) |
| 6 | Resources, Comparative Advantage, and Income Distribution (continue) --- Chapter 4 : An increase in the relative price of a good causes the real wage or real rental rate of the factor used intensively in the production of that good to increase, while the real wage and real rental rates of other factors of production decrease. If output prices remain constant as the amount of a factor of production increases, then the supply of the good that uses this factor intensively increases, and the supply of the other good decreases. Page numbers (115-150) |
| 7 | The Standard Trade Model --- Chapter 5 : The terms of trade refers to the price of exports relative to the price of imports. Export-biased growth reduces a country’s terms of trade, reducing its welfare and increasing the welfare of foreign countries. Import-biased growth increases a country’s terms of trade, increasing its welfare and decreasing the welfare of foreign countries. Page numbers (151-178) |
| 8 | The Standard Trade Model (cont.) --- Chapter 5 : When a country imposes an import tariff, its terms of trade increase and its welfare may increase. When a country imposes an export subsidy, its terms of trade decrease and its welfare decreases. International borrowing and lending is intertemporal trade, where countries with profitable investment opportunities borrow funds today and repay lenders in the future, benefiting both borrowers and lenders. Page numbers (151-178) |
| 9 | Midterm Exam |
| 10 | The Instruments of Trade Policy --- Chapter 6 : A tariff increases the home price and the quantity supplied and reduces the quantity demanded and the quantity traded; also decreases the world price when the country is “large.” A quota does the same; an export subsidy does the same. Tariffs generate government revenue; export subsidies drain it; import quotas are revenue neutral. Page numbers (243-273) |
| 11 | The Instruments of Trade Policy (continue) --- Chapter 6 : The welfare effect of a tariff, quota, or export subsidy can be measured by efficiency loss from consumption and production distortions. terms of trade gain or loss. With import quotas, voluntary export restraints, and local content requirements, the government of the importing country receives no revenue. With voluntary export restraints and occasionally import quotas, quota rents go to foreigners. Page numbers (243-273) |
| 12 | National Income Accounting and the Balance of Payments --- Chapter 7 : A country’s GNP is roughly equal to the income received by its factors of production. In an open economy, GNP equals the sum of consumption, investment, government purchases, and the current account. GDP is equal to GNP minus net receipts of factor income from abroad. It measures the output produced within a country’s borders. Page numbers (349-377) |
| 13 | National Income Accounting and the Balance of Payments (continue) --- Chapter 7 : National saving minus domestic investment equals the current account (≈ exports minus imports). The current account equals the country’s net foreign investment (net outflows of financial assets). The balance of payments accounts records flows of goods & services and flows of financial assets across countries. Page numbers (349-377) |
| 14 | Overview of the Term --- Review of the chapters : theory and exercises. |
| Method | Qty | % Each |
|---|---|---|
| Midterm Exam(s) | 1 | 30 |
| Project | 1 | 30 |
| Final Exam | 1 | 40 |
International Economics: Theory and Policy, Paul R. Krugman, Maurice Obstfeld, Pearson Addison Wesley, 11th Ed. 2018. - this is the last edition.