Delivered at:: Department of Theoretical Economics

Course type:: Elective course

When:: 3 year, 1, 2 module

Instructor

Tarasov, Alexander

Full Syllabus

Abstract

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 five 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). To complement the lectures, throughout the course, I will be assigning supplementary readings that will present important findings on the topics covered by the lectures. The only pre-requisite for this course is intermediate level microeconomics.

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 logic and intuition behind the main trade models that explain trade between countries that differ in technology or factor endowments
be familiar with the logic and intuition behind the Krugman model that explains trade between similar countries
develop critical thinking about economic matters related to international trade policies
understanding different 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; and the whole economy

Course Contents

Comparative Advantage and Trade
Increasing Returns To Scale and Trade
The Magnitude of the Gains from Trade
International Trade Policy Under Perfect Competition
Different Consequences of International Trade

Assessment Elements

Homeworks
There will be three homeworks.
Class participation and activity
Midterm
Final test

Interim Assessment

2024/2025 2nd module
0.05 * Class participation and activity + 0.05 * Class participation and activity + 0.49 * Final test + 0.08 * Homeworks + 0.04 * Homeworks + 0.29 * Midterm

Bibliography

Recommended Core Bibliography

9780132146654 - Krugman, Paul R.; Obstfeld, Maurice; Melitz, Marc J. - International Economics : Theory and Policy, Global Edition - 2015 - Pearson - https://search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=1419045 - nlebk - 1419045
Advanced international trade : theory and evidence, Feenstra, R. C., 2016
Feenstra, R. C. (2004). Advanced International Trade : Theory and Evidence. Princeton, N.J.: Princeton University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=295542
International economics : theory & policy, Krugman, P. R., Obstfeld, M., 2009
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

International economics : theory & policy, Krugman, P. R., 2012
International economics : theory and policy, Krugman, P. R., 1997
International economics : theory and policy, Krugman, P. R., 2015

Authors

Мальбахова Диса Анзоровна
TARASOV ALEKSANDR IGOREVICH

Bachelor’s Programme 'Economics'

Contacts

International Trade