California State University, Sacramento
Department of Economics
Econ 290- International Trade
Spring 2017
Instructor: Min Min Thaw, Ph.D.
Email: [email protected]
Office: Benicia Hall 1019
Office Phone: 916-278-4624
Office Hours: Monday 9:45 to 11:45 a.m.,
Tuesday 11:15 to 1:15 p.m., or by
appointment
Class Time: Monday 5:30 to 8:20 p.m.
Course Description: This course analyzes the modern trade theories, their empirical
relevance and the role of multinational firms in the evolution of international trade
patterns. Discussion focuses on theoretical and empirical evaluation of trade policy
instruments. (University Description) Prerequisite: Classified graduate status in
Economics or instructor permission.
I intend to include international finance and open economy macroeconomics in this
course as well. We will briefly examine balance of payments, exchange rate
determinations, international policy coordination and capital markets.
Required Textbook: International Economics, 3rd edition by Robert Feenstra and Alan
Taylor. (2014) Worth Publishers.
Grading:
In Class Participation and Assignments
Two midterms
Literature Review Project
Research Proposal
20%
40% (20 each)
20%
20%
The curve looks roughly like this:
89+ A and A79to 88 B+, B, and B69 to 78 C+, C, and C59 to 69, D+, D, and D
Below 58 F
Guidelines and requirements for literature review project and research proposal will be
posted on the curse webpage through SacCT.
Exams: Each exam will consist of multiple choice questions and short essay questions.
The essay questions will be evaluated and graded based on your demonstration of your
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understanding of the concepts and the clarity of your writing. All exams are closed
books, and close notes.
You are responsible to bring a Scantron form (#882-E) and a simple calculator. No cell
phones or note cards are allowed. No make up exams will be given unless there has been
a major catastrophe and I have been notified in advance.
If you are sick, you need to provide me with a physician’s note that clearly states that you
could not have taken a midterm or final on the date it was given. Merely being seen by a
physician is not sufficient. Failure to provide a legitimate university excuse will result in
a zero on the exam. Grade of incomplete will not be given.
Class Policies: Regular attendance REQUIRED. You are responsible for all work
missed due to absences. Get the missed notes from a classmate as soon as possible
following your absence to maintain a flow of materials.
Should you have reason to come to class late or to leave class early, please feel free to do
so, but remember that all missed work is your responsibility. Please be courteous in
entering and leaving a lecture and make all attempts not to disturb your classmates.
Academic honesty is expected. You are encouraged to work together and help each other
in studying and in-class assignments. However, work submitted for grade must be that of
an individual student. Academic dishonesty and plagiarism as described in the
University policy may result in an “F” grade, should there is an evidence of cheating in
the exams, in homework assignments, or in writing research proposal.
No plagiarism is allowed. The University Policy Manual defines the plagiarism as
“Plagiarism, as a form of cheating, is the use of distinctive ideas or works belonging to
another person without providing adequate acknowledgement of that person’s
contribution. Regardless of the means of appropriation, incorporation of another’s work
into one’s own requires adequate identification and acknowledgement.”
For more details, please visit:
http://www.csus.edu/umanual/AcademicHonestyPolicyandProcedures.htm
If you have a disability and require accommodations, you need to provide disability
documentation to SSWD, Lassen Hall 1008, (916) 278-6955. Please discuss your
accommodation needs with me after class or during my office hours early in the semester.
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Tentative Course Outline
Week
1: January 23
Topic
Syllabus
Introduction: Trade in the
Global Economy
And National Income
Accounting and Balance of
Payments
Reading
Chapter 1 (F and T)
2: January 30
Discussions: 1) Antonucci
and Manzocchi 2) Carrere
3: February 6
Trade and Technology: The
Ricardian Model
Chapter 2 (F and T)
4: February 13
The Ricardian Model
continued
Chapters 2
5: February 20
Gains and Losses from
Trade in the SpecificFactors Model
6: February 27
Trade and Resources: The
Heckscher-Ohlin Model
7: March 6
Midterm I
8: March 13
Movement of Labor and
Capital Between Countries
9: March 20
Spring Break
10: March 27
Increasing Returns to Scale
and Monopolistic
Competition
11: April 3
Discussions: 1) Ottaviano
and Giovanni 2) Hummels
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Articles
Chapter 3
Chapters 4
Chapter 5
Chapter 6
Articles
and Levinsohn
12: April 10
13: April 17
14: April 24
15: May 1
16: May 8
Import Tariffs and Quotas
Under Perfect Competition
Discussion: Feenstra
Chapter 8
Articles
Midterm II
The Global Macroeconomy
and Intro to Exchange Rates
and the Foreign Exchange
Market
Chapters 12 and 13
National and International
Accounts; Income, Wealth,
and the Balance of
Payments AND The Gains
from Financial
Globalization
Chapters 16 and 17
Reading List
Notes:
1.
2.
Disclaimer: This list is subject to change as we progress through the semester.
* designated articles/book chapters are required readings and will be covered in detail in class.
1. Ricardian Model
1.1 Theory
*F and T: Chapter 1
Dornbusch, R., S, Fischer, and P. Samuelson, (1977), “Comparative Advantage,
Trade and Payments in a Ricardian Model with a Contunuum of Goods,” American
Economic Review, 67, 823-839.
1.2 Empirical Evidence
Golub, S and C-T Hsieh, (2000), “Classical Ricardian Theory of Comparative
Advantage Revisited,” Review of International Economics, 8(2), 221-234.
Balassa, B., (1963), “An Empirical Demonstration of Classical Comparative Cost
Theory,” Review of Economics and Statistics, 45, 231-238.
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2. Heckscher-Ohlin Model
2.1 Theory
* F and T: Chapter 4
Dornbusch, R., S. Fischer, and P. Samuelson, (1980), “Heckscher-Ohlin Trade
Theory with a Continuum of Goods,” Quarterly Journal of Economics, 95, 203-224.
2.2 Empirical Evidence
Davis, D.R and D.W. Weinstein, (2001), “An account of Global Factor Trade,”
American Economic Review, 91(5), 1423-53.
Debaere, P., (2003), “Relative factor Abundance and Trade,” Journal of Political
Economy, 111, 589-609.
Brecher, R. A. and E.U Choudhri, (1982), “The Leontief Paradox, Continued,”
Journal of Political Economy, 90(4), 820-823.
Helpman, E., (1999), “The Structure of Foreign Trade,” Journal of Economic
Perspectives, 13(2), 121-44.
3. Specific Factors Model
* F and T: Chapter 2
Neary, J., (1978), “Short-Run Capital Specificity and the Pure Theory of International
Trade,” Economic Journal, 88, 488-510.
4. Economies of Scale and Monopolistic Competition- Theory
* F and T: Chapter 6
Krugman, P. R., (1979), “Increasing Returns, Monopolistic Competition, and
International Trade,” Journal of International Economics, 9, 469-479.
Krugman, P. R., (1980), “Scale Economies, Product Differentiation, and the Pattern
of Trade,” American Economic Review, 70, 950-959.
Krugman, P.R., (1981), “Intra-Industry Specialization and the Gains from Trade,”
Journal of Political Economy, 89, 959-973.
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5. Monopolistic Competition
5.1 The Gravity Model-Theory
* F and T: Chapter 6
Anderson, J.A., (1979), “A Theoretical Foundation for the Gravity Equation,”
American Economic Review, 69, 106-116.
5.2. Evidence
Debaere, P., (2005), “Monopolistic Competition and Trade, Revisited: Testing the
Model without Testing for Gravity,” Journal of International Economics, 66(1), 249266.
* Hummels, D. and James Levinsohn, (1995), “Monopolistic Competition and
International Trade: Reconsidering the Evidence,” Quarterly Journal of Economics,
110(3), 799-836.
Redding, S., and A. J. Enables, (2004), “Economic Geography and International
Inequality,” Journal of International Economics, 62, 53-82.
Trifler, D., (2004), “The Long and Short of the Canada-U.S. Free Trade Agreement,”
American Economic Review, 94, 870-895.
6. Political Economy and Trade Policy
* F and T: Chapter 8
Grossman, G and E. Helpman, (1994), “Protection for Sale,” American Economic
Review, 84(4) 833-50.
Baldwin, R.E., (1989), “The Political Economy of Trade Policy,” Journal of
Economic Perspectives, 3(4), 1999-135.
Karacovoli, B., (2011), “Productivity Matters for Trade Policy: Theory and
Evidence,” International Economic Review, 52(1), 33-62.
Mitra, D., (1999), “Endogenous Lobby Formation and Endogenous Protection: A
Long-Run Model of Trade Policy Determination,” American Economic Review, 89,
1116-1134.
Goldberg, P.K. and G Maggi, (1999), “Protection for Sale: An Empirical
Investigation,” American Economic Review, 89(5), 1135-55.
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Readings for Week (Articles)
II.
*Antonucci, D. and S. Manzocchi, (2006), “Does Turkey Have a Special
Trade Relation With the EU?: A Gravity Model Approach,” Economic
Systems, 30(2), 157-169.
*Carrere, C., (2006), “Revisiting the Effects of Regional Trade Agreements
on Trade Flows with the Proper Specification of the Gravity Model,”
European Economic Review, 50(2), 223-247.
XI.
*Ottaviano and Giobanni Peri, (2005), “Rethinking Gains from Immigration:
Theory and Evidence from the U.S,” National Bureau of Economic Research,
W11672
*Hummels, D. and James Levinsohn, (1995), “Monopolistic Competition and
International Trade: Reconsidering the Evidence,” Quarterly Journal of
Economics, 110(3), 799-836.
XII.
* Feenstra, R. C., (1992), “How Costly is Protectionism?” The Journal of
Economic Perspectives, 6(3), 159-178.
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