International Trade
EMA Course Syllabus
2017, Spring
Instructor：
TA:
Zhiyuan Li
Associate Professor of Economics
E-mail: [email protected]
Office hours: Tuesday, 3-5pm
Office: School of Economics, 511
Phone: 55665308
TBA
E-mail:
Office hours:
Office:
Phone:
Lectures: TBA
Course Objective:
The goals of the course are: (i) to introduce students to current topics of interest in international trade
(ii) to help students develop skills for conducting research, including evaluating existing research,
presenting their work, working collaboratively, and defining and organizing a research project, and (iii)
to help students identify the topic for a research paper. In order to achieve these goals, we focus on the
most cutting-edge research in international trade, with a bit introduction of necessary background
classical theory. Different from traditional lectures, our class meetings require heavy discussions led by
students which in turn require huge efforts from students to read, understand, organize and present.
Course Grades:
You will be evaluated on the basis of presentations, two referee reports, and a research proposal. Your
grade will be calculated using the method listed below.
Presentation:
50%
Referee reports:
20%
Research proposal:
30%
Referee Report: TWO two-page referee reports, evaluating two papers that from the most recent NBER
working paper series (http://admin.nber.org/papersbyprog/ITI.html) and fall into the topics covered in
class. The report should (a) identify the question the paper addresses and the gap in the literature the
paper attempts to fill, (b) briefly summarize the paper’s research methodology, data sources,
identifying assumptions, and results, (c) critically evaluate any unsatisfactory components of the paper,
and (d) make recommendations for how the paper can be improved. Note that parts c) and d) are most
important in your report as you are expected to critically analyze and provide constructive suggestions
for the paper. It is NOT a summary nor a replication of the paper, but something that could help the
author(s) to improve their paper.
Research Proposal: A research proposal in which students present a detailed plan for a research paper
that is substantial enough to count as a dissertation chapter. The proposal should be 15-20 pages long
(double-spaced) and describe: the question you want to address (what); why do you think it is
important (why); how do you plan to address the question (how); and what is your expected result from
your research. Your grades will reflect both the quality of the question and the quality of the proposed
approach. Please discuss your idea with the instructor before you start.
Presentation: Our class meetings are to be organized in a small workshop format. About three papers
are to be discussed in each of our lecture each week. Each presentation has about 45 minutes, including
comments and questions. You will be assigned papers to read and present in our lectures. When
preparing the presentation, you should write the PowerPoint as if you are the author introducing your
own research to an audience with similar background. That is, you should consider an effective way of
conveying the most important message from the paper. The following items are important in your
presentation: 1) What is the research topic, 2) why is the question important, 3) what is its contribution
to the literature and our knowledge, 4) how is the research conducted, 5) what are the possible
loop-holes in the main part of the research and how to address these. Note that your main objective is
to introduce forcefully the idea, thus unimportant techniques, which are not helpful to understand the
main idea, may be ignored in your presentation.
Tricks for preparing the presentation:
a) You are forcing people to listen to you so you have to attract them
b) In order for attracting people, you have to make your point straight-forward, concise, and organized
c) Presentation is communication
d) Convey your idea in your presentation, not in your slides
e) Keep your slides as simple as possible as long as it can support your presentation
Textbook:
Robert Feenstra, Advanced International Trade: Theory and Evidence (F)
Eaton, Jonathan and Samuel Kortum, Technology in the Global Economy: A Framework for
Quantitative Analysis (EK)
Costas Arkolakis, Notes on Graduate International Trade (A)
Avinash Dixit and Victor Norman, Theory of International Trade (DN)
Elhanan Helpman and Paul Krugman, Market Structure and Foreign Trade (HK)
Bhagwati, J.N., A. Panagariya and T.N. Srinivasan, Lectures on International Trade (second
edition), 1998 (BPS)
Academic integrity:
* Be honest at all times.
* Act fairly toward others. For example, do not disrupt or seek an unfair advantage over others
by cheating, or by talking or allowing eyes to wander during exams.
* Take group as well as individual responsibility for honorable behavior. Collectively, as well
as individually, make every effort to prevent and avoid academic misconduct, and report acts of
misonduct that you witness.
* Do not submit the same work in more than one class. Unless otherwise specified by the
instructor, all work submitted to fulfill course requirements must be work done by the student
specifically for that course. This means that work submitted for one course cannot be used to
satisfy requirements of another course unless the student obtains permission from the
instructor.
* Unless permitted by the instructor, do not work with others on graded coursework, including
in class and take-home tests, papers, or homework assignments. When an instructor
specifically informs students that they may collaborate on work required for a course, the
extent of the collaboration must not exceed the limits set by the instructor.
* Know what plagiarism is and take steps to avoid it. When using the words or ideas of another,
even if paraphrased in your own words, you must cite your source. Students who are confused
about whether a particular act constitutes plagiarism should consult the instructor who gave the
assignment.
* Know the rules - ignorance is no defense. Those who violate campus rules regarding
academic misconduct are subject to disciplinary sanctions, including suspension and dismissal.
Course Outline and Reading List:
Starred articles (*) are to be presented.
Lecture 1: Ricardian Model
1a) 2x2 model
FA, Chapter 2
F, Chapter 1
*Samuelson, P., (2004), “Where Ricardo and Mill Rebut and Confirm Arguments of
Mainstream Economists Supporting Globalization.” Journal of Economic Perspective, Vol.
18(3)
Samuelson, P., (2001), “A Ricardo-Sraffa Paradigm Comparing Gains from Trade in Inputs
and Finished Goods.” Journal of Economic Literature, Vol. 39(4)
1b) Dornbusch-Fisher-Samuelson (1977) model
*Dornbusch, R., S. Fischer and P. Samuelson (1977), “Comparative Advantage, Trade, and
Payments in a Ricardian Model with a Continuum of Goods.” American Economic Review.
*Matsuyama, K., (2008), “Ricardian Trade Theory.” In “The New Palgrave Dictionary of
Economics” (second edition), edited by Durlauf, S. and L. Blume
F, Chapter 3
*Dornbusch, R., S. Fischer and P. Samuelson (1980), “Heckscher-Ohlin Trade Theory with a
Continuum of Goods.” The Quarterly Journal of Economics, Vol. 95(2)
1c) Multi-country extension
*Costinot, A., (2009) “An Elementary Theory of Comparative Advantage”, Econometrica,
Vol. 74(4)
1d) The EK framework
*Eaton, J. and S. Kortum (2002), “Technology, Geography, and Trade,” Econometrica, 70 (5),
1741- 1779.
EK chapters 4 – 6
*Alvarez, F. and R. Lucas (2007), “General Equilibrium Analysis of the Eaton-Kortum Model
of International Trade,” Journal of Monetary Economics, Vol. 54(6), 1726-1768
*Caliendo, L. and F. Parro (2015), “Estimates of the Trade and Welfare Effects of NAFTA,”
Review of Economics Studies, Vol. 82(1), 1-44
*Bernard, A., J. Eaton, B. Jensen, and S. Kortum (2003), “Plants and Productivity in
International Trade,” American Economics Review,
Simonovska, I. and M. Waugh (2014), “The Elasticity of Trade: Estimates and Evidence,”
Journal of International Economics, Vol. 92(1), 34-50
*Costinot, A., D. Donaldson, and I. Komunjer (2012) “What Goods Do Countries Trade? A
Quantitative Exploration of Ricardo's Ideas,” Review of Economic Studies, Vol. 79(2),
581-608.
Lecture 2: “New” and “New New” Trade Theory
2a) Basic Monopolistic Competition Model
F, Chapter 5
*Krugman, P. (1979) “Increasing Returns, Monopolistic Competition, and International
Trade” Journal of International Economics,
*M. Melitz (2003), “The Impact of Trade on Intra-Industry Reallocations and Aggregate
Industry Productivity” Econometrica,
*Krugman, P. (1980), “Scale Economics, Product Differentiation and the Pattern of Trade,”
American Economics Review,
Krugman (1995), “Increasing Returns, Imperfect Competition and the Positive Theory of
International Trade,” Handbook of International Economics, vol. III, edited by Grossman and
Rogoff
2b) Extensions and Quantitative
*Melitz, M. and G. Ottaviano (2008). “Market Size, Trade and Productivity.” Review of
Economic Studies 75(1), p.295-316.
*Chaney, Thomas, (2008) “Distorted Gravity: The Intensive and Extensive Margins of
International Trade,” American Economic Review, 98(4), pp. 1707-1721.
*Eaton, Jonathan, Samuel Kortum, and Francis Kramarz (2011), “An Anatomy of
International Trade: Evidence from French Firms,” Econometrica, Vol. 79(5), pp. 1453-1498.
*Eaton, J., Kortum, S. and F. Kramarz (2004). "Dissecting Trade: Firms, Industries, and
Export Destinations." American Economic Review P&P 94, p.150-4.
Bernard, A., Redding, S. and P. Schott (2007). “Comparative Advantage and Heterogeneous
Firms.” Review of Economic Studies 74.
2c) Sunk Costs in Trade
*Arkolakis, C. (2010) “Market Penetration Costs and the New Consumers Margin in
International Trade,” Journal of Political Economy.
*Helpman, E., Melitz, M. and Y. Rubinstein (2008). "Estimating Trade Flows: Trading
Partners and Trading Volumes." Quarterly Journal of Economics 123, p.441-87.
*Roberts, M. and J. Tybout (1997). "The Decision to Export in Colombia: An Empirical
Model of Entry with Sunk Costs." American Economic Review 87(4), p.545-64.
*Das, M., Roberts, M. and J. Tybout (2007). "Market Entry Costs, Producer Heterogeneity
and Export Dynamics." Econometrica 75(3), p.837-73.
Dixit, A. (1989a). "Entry and Exit Decision under Uncertainty." Journal of Political Economy
97(3), p.620-38.
Dixit, A. (1989b). "Hysteresis, Import Penetration, and Exchange Rate Pass-Through."
Quarterly Journal of Economics 104(2), p.205-28.
Lecture3: Gains from Trade and Productivity
3a) Gain from Trade
*Arkolakis, C., A. Costinot, and A. Rodriguez-Clare (2012), “New Trade Models, Same Old
Gains?” American Economic Review, Vol. 102(1): 94-130.
*Burstein, A. and J. Cravino, (2015) “Measured Aggregate Gains from International Trade”
American Economic Journal: Macroeconomics, Vol. 7(2) 181-218
Goldberg, Khandelwal, Pavcnik, Topalova (2010) “Imported Intermediate Inputs and
Domestic Product Growth: Evidence from India,” Quaterly Journal of Economics
3b) Reallocation
*Hsieh, C. and Klenow, P. (2009) “Misallocation and Manufacturing TFP in China and
India,” Quarterly Journal of Economics
*Pavcnik, N. (2002). "Trade Liberalization, Exit, and Productivity Improvements: Evidence
from Chilean Plants." The Review of Economic Studies 69, p.245-76.
3c) Learning by Exporting
*De Loecker, J. (2007). "Do Exports Generate Higher Productivity? Evidence from Slovenia."
Journal of International Economics 73.
*Lileeva, A. and D. Trefler, (2010) “Improved Access to Foreign Markets Raises Plant Level
Productivity... for Some Plants,” Quarterly Journal of Economics, Vol. 125(3), pp. 1051-1099.
Lecture 4: Offshoring
*Grossman, Gene and Esteban Rossi-Hansberg, (2008) “Trading tasks: A Simple Theory of
Offshoring,” American Economic Review, Vol. 98(5), 1978-1997.
*Antràs, P., Garicano, L. and E. Rossi-Hansberg (2006). "Offshoring in a Knowledge
Economy." Quarterly Journal of Economics 121(1), p.31-77.
Andres Rodriguez-Clare, 2010, “Offshoring in a Ricardian World,” American Economic
Journal: Macroeconomics, vol. 2(2), 227-58.
Helpman, E. (1984). "A Simple Theory of International Trade with Multinational
Corporations." Journal of Political Economy 92(3), p.451-71.
Carr, D., Markusen, J. and K. Maskus (2001). "Estimating the Knowledge-Capital Model of
the Multinational Enterprise." American Economic Review 91(3), p.693-708.
HK. Chapter 12
Yi, K. (2003). "Can Vertical Specialization Explain the Growth of World Trade?" Journal of
Political Economy 111(1), p.52-102.
Tintelnot, F. (2013). “Global Production with Export Platforms.” Chicago University mimeo.
Alviarez, V. (2013). “Multinational Production and Comparative Advantage.” University of
Michigan mimeo.
Koopmana, R., Z. Wang and S. Wei (2013) “Tracing Value-added and Double Counting in
Gross Exports,” American Economic Review, forthcoming.
Keller, W. and S. Yeaple (2012) “The Gravity of Knowledge,” American Economic
Review.
*Hummels, D., J. Ishii, and K. Yi. (2001) “The Nature and Growth of Vertical Specialization
in World Trade” Journal of International Economics, 54: 75-96.
Costinot, A., Janathan Vogel and Su Wang, 2011, “An Elementary Theory of Global Supply
Chains,” NBER Working Paper No. 16936, http://papers.nber.org/papers/w16936.
Costinot, A., Janathan Vogel and Su Wang, 2012, “Global Supply Chains and Wage
Inequality,” American Economic Review: Papers and Proceedings, Vol. 102(3), pp. 396-401.
Lecture 5: Quality and Trade
*Verhoogen, E. (2008). “Trade, Quality Upgrading and Wage Inequality in the Mexican
Manufacturing Sector.” Quarterly Journal of Economics 123 (2), p. 489-530.
*Kugler, M. and E. Verhoogen (2012). “Prices, Plant Size and Product Quality.” Review of
Economics Studies 79(1), p.307-39.
*Hummels, D. and P. Klenow (2005). "The Variety and Quality of a Nation's Exports."
American Economic Review 95(3), p. 704-723.
Khandelwal, A. (2010). “The Long and Short (of) Quality Ladders.” Review of Economics
Studies 77, p.1450-76.
Manova, K. and Z. Zhang (2008). "Export Prices across Firms and Destinations." Quarterly
Journal of Economics.
Baldwin, R. & J. Harrigan (2011). "Zeros, Quality and Space: Trade Theory and Trade
Evidence," American Economics Journal: Microeconomics 3, p.60-88.
Johnson, R. (2012). “Trade and Prices with Heterogeneous Firms.” Journal of International
Economics 86(1).
Lecture 6: Trade and Labor Market
*Helpman, E., Itskhoki, O., Redding, S. (2010a) “Inequality and Unemployment in a Global
Economy.” Econometrica 78 (4), 1239–1283.
Frias, J., Kaplan, D. and E. Verhoogen (2012). "Exports and Wage Premia: Evidence from
Mexican Employer-Employee Data." American Economic Review P&P.
*Helpman, E. and O. Itskhoki (2010b). "Labor Market Rigidities, Trade and Unemployment."
Review of Economic Studies 77(3), p.1100-37.
*Parro (2013), “Capital-Skill Complementarity and the Skill Premium in a Quantitative Model
of Trade” American Economic Journal: Macroeconomics, Vol. 5(2) 72-117
*Costinot, A. and J. Vogel (2010), “Matching and Inequality in the World Economy,” Journal
of Political Economy
Davis, D. (1998). "Does European Unemployment Prop Up American Wages? National Labor
Markets and Global Trade." American Economic Review 88, p.478-94.
Davis, D. and J. Harrigan (2011). "Good Jobs, Bad Jobs, and Trade Liberalization." Journal of
International Economics 84, p.26-36.
Lecture7:
Trade Liberalization and Wage Inequality
Bustos, P. (2011). "Trade Liberalization, Exports, and Technology Upgrading: Evidence on
the Impact of MERCOSUR on Argentinian Firms." American Economic Review 101,
p.304-40.
Waugh, Michael. (2010) “International Trade and Income Differences" American Economic
Review, 100 (5), 2093-2124.
*Helpman, E., Itskhoki, O., Muendler, M., Redding, S., (2013) “Trade and Inequality: From
Theory to Estimation.”
Lecture 8: Multi-Product Firms
*Bernard, A., Redding, S. and P. Schott (2010). "Multi-Product Firms and Product
Switching." American Economic Review 100, p.70-97.
Bernard, A., Redding, S. and P. Schott (2011). "Multi-Product Firms and Trade
Liberalization." Quarterly Journal of Economics 126 (3): 1271-1318.
Eckel, C. and P. Neary (2010). "Multi-Product Firms and Flexible Manufacturing in the
Global Economy." Review of Economics Studies 77, p.188-217.
Lecture 9: Institutions
*Nunn, N. (2007). "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade."
Quarterly Journal of Economics 122(2), p.569-600.
Levchenko, A. (2007). "Institutional Quality and International Trade." Review of Economic
Studies 74(3), p.791-819.
Berkowitz, D., Moenius, J. and K. Pistor (2006). "Trade, Law and Product Complexity."
Review of Economics and Statistics 88(2), p.363-73.
Acemoglu, D., Antràs, P. and E. Helpman (2007). "Contracts and Technology Adoption."
American Economic Review 97(3), p.916-43.
Antràs, P. (2005). "Incomplete Contracts and the Product Cycle." American Economic
Review 95(4), p.1054-73.
Levchenko, A. (2013). "International Trade and Institutional Change." Journal of Law,
Economics, and Organization 29(5), p.1145-81.
Chor, D. (2010). "Unpacking Sources of Comparative Advantage: A Quantitative Approach."
Journal of International Economics 82, p.152-67.
*Costinot, A. (2007). "On the Origins of Comparative Advantage." Journal of International
Economics 77(2), p.255-64.
Lecture10: Foreign Direct Investment
Brainard, L. (1997). "An Empirical Assessment of the Proximity-Concentration Trade-off
Between Multinational Sales and Trade." American Economic Review 87(4), p.520-44.
Carr, D., Markusen, J. and K. Maskus (2001). "Estimating the Knowledge-Capital Model of
the Multinational Enterprise." American Economic Review 91(3), p.693-708.
*Yeaple, S. (2003a). "The Role of Skill Endowments in the Structure of U.S. Outward FDI."
Review of Economics and Statistics 85(3), p.726-34.
*Yeaple, S. (2003b). "The Complex Integration Strategies of Multinationals and Cross
Country Dependencies in the Structure of FDI." Journal of International Economics 60,
p.293-314.
Yeaple, S. (2006). "Offshoring, Foreign Direct Investment, and the Structure of U.S. Trade."
Journal of the European Economic Association 4, p.602-11.
*Holms, T., E. McGrattan and E. Prescott, (2015) “Quid Pro Quo: Technology Capital
Transfers for Market Access in China” Review of Economic Studies
McGrattan, E., and E. Prescott, (2010) “Technology Capital and the U.S. Current Account”,
American Economic Review, 100, 1493–1522.
Lecture11:
Boundaries of Multinationals
Feenstra, R. and G. Hanson (2005). "Ownership and Control in Outsourcing to China:
Estimating the Property-Rights Theory of the Firm." Quarterly Journal of Economics 120(2),
p.729-61.
*Nunn, N. and D. Trefler (2008). "The Boundaries of the Multinational Firm: An Empirical
Analysis." in Helpman, E., Marin, D. and T. Verdier (eds). The Organization of Firms in a
Global Economy. Cambridge, MA: Harvard University Press, 2008.
Bernard, A., Jensen, B., Redding, S. and P. Schott (2008). "Intra-Firm Trade and Product
Contractibility." American Economic Review P&P 100, p.444-8.
Branstetter, L., Fisman, R. and F. Foley (2006). "Do Stronger Intellectual Property Rights
Increase International Technology Transfer? Empirical Evidence from U.S. Firm-Level Panel
Data." Quarterly Journal of Economics 121(1), p. 321-49
Lecture12:
Infrastructure and Trade
*Donaldson, D., (2016), “Railroads of the Raj: Estimating the Impact of Transportation
Infrastructure”, American Economic Review, forthcoming
Lecture13: Trade and Finance
Feenstra, R., Z. Li and M. Yu (2013) “Exports and Credit Constraints under Incomplete
Information: Theory and Evidence from China,” Review of Economic Statistics
*Amiti, M. and D. Weinstein, (2011) “Exports and Financial Shocks” Quarterly Journal of
Economics Vol:126 (4): 1841-1877.
*Antras, P., and C. Foley. (2015) “Poultry in Motion: A Study of International Trade
Finance Practice,”Journal of Political Economy Vol:123(4) 853-901.
Lecture14: China Syndrome
*Autor, D., D. Dorn, and G. H. Hanson (2013) "The China Syndrome: Local Labor Market
Effects of Import Competition in the United States," American Economic Review, Vol.
103(6), 2121–68;
*Autor, D., D. Dorn, and G. H. Hanson (2015) "Untangling Trade and Technology: Evidence
from Local Labor Markets," the Economic Journal, Vol. 125(584), 621–46.
Autor, D., D. Dorn, and G. H. Hanson (2013) “The Geography of Trade and Technology
Shocks in the United States,” the American Economic Review, Vol.103(3), 220–25.
Acemoglu, D., D. H. Autor, D. Dorn, G. H. Hanson, and B. Price (2014) “Import Competition
and the Great U.S. Employment Sag of the 2000s,” NBER Working Paper No. 20395