Professor: Douglas Nelson
Office: 108 Tilton Hall
Office Hours: TR 3:30-5:00, and by appointment
Phone: 865-5317

Even the most cursory reading of the news should alert us to the importance of international economic relations. In its more spectacular forms, these relations are front page news, but even in their more mundane forms international trade, international investment, and international money affect our lives in profound and intimate ways. Whether to increase our effectiveness in our directly economic pursuits or to meet the burdens of good citizenship, an understanding of these forces is clearly important.

In this course we extend the ideas and tools developed in intermediate microeconomics to the study of international economic relations. We begin by studying a number of simple models of trade between nations that attempt to explain that trade in terms of a small number of basic facts about the economic conditions characterizing nations: technology, tastes, and endowments of factors of production. Using these simple models as our tools, we turn to an examination of the arguments for free trade and protection. We finish the course with an anlysis of some of the political and institutional details of trade policy making and implementation, with a particular focus on the US. Not only will this analysis help us to better understand one of the premier economic issues of the day, but it will increase our familiarity and facility with the models developed in the first part of the course.

The primary reading material for this course will be found in the following books (which can be purchased at the Tulane University bookstore):

Richard Caves, Jeffrey Frankel and Ronald Jones (1999) World Trade and Payments: An Introduction (8th edition) . New York: Harper/Collins (Text)

Eirik Evenhouse and Siobhan Reilly (1999). Study Guide to Accompany World Trade and Payments. New York: Harper and Row (Workbook).

Course Prerequisites. International economics is a branch of economics and, as such, it builds on existing ideas and tools from other branches of economics, especially microeconomics and macroeconomics. The material presented in both lecture and text assume that you have had an intermediate microeconomics course (ECN 301 or 303) and the prerequisites to that course. We will be making substantial use of algebraic and geometric argument in this class and it is assumed that you have a level of mathematical skill consistent with high school algebra and geometry.

Evaluation. Your performance in this course will be evaluated on the basis of three examinations and twelve homework assignments. Each examination will be worth 100 possible points and each homework will be worth 10 possible points and you may drop two homework scores. To earn a grade in the A range you must earn at least 90 percent of the 400 available points. To pass the course you must receive at least 60 percent of the available points. The grades between these two limits will be determined by the distribution of points in the class as a whole.

Examinations. All three exams will have the following format: about 40% short answer questions and about 60% essays. In general there will be more questions of both types than must be answered, so you will have some choice (though there is often one mandatory question which everyone must answer). Sample exams will be available at .

Homework. The syllabus that follows this course description lists the reading that you are expected to have done for the lecture on the listed date. For each date, in addition to the reading, the syllabus lists several homework problems. Homework is due on or before the first class in which that material is discussed. Late homework will not be accepted, and will receive a score of 0. The percent of total available homework credit will be taken as your homework score. For example, if you answer 90% of the homework questions correctly, your homework score is 90.

Policy on examinations. The midterm exams will be given on September 30 and November 2. Unless you have a standard university accepted excuse for missing the exam (eg. health with standard university form), you must take the exams at their scheduled time. If you miss one of the first two exams there will be a cumulative makeup exam (given during finals week). There will be only one makeup exam. If you miss more than one exam you will still have only 100 points of available credit from the makeup exam. (Note: to be eligible to take a makeup exam you must have a legitimate excuse for having missed the regular exam.) The final examination will only be given on the scheduled date: Friday 17 December 1999, 8:00-12:00 (there will be no exceptions so do not make travel plans that conflict with this).

Additional Exam and Homework Information: Exams will be returned in class, homework must be picked up at my office. Exam answer keys will be available from my webpage.

Some Good Advice (At No Extra Charge): First, keep current with the reading. Not only will that maximize your homework grades, but it will allow you to make the most of lecture. Second, do the homework. This is virtually free credit, and it will improve your performance on exams as well. Third, you are only required to do a subset of the problems in the text and the workbook, it is not a bad idea to do all of them. Fourth, ask questions in class. If you read something and it is unclear and then it is unclear during lecture, ask about it. Your classmates will probably thank you. This is one of the few ways, before an exam, that I can gauge how the material is getting across. Fourth, come see me during my office hours. This is another opportunity to get clarification and help on material about which you are unclear. But don't wait until the last minute, by then it is usually too late.

FALL 1999

Course Introduction

September 2: Course Introduction

Part I: Basic Analysis of International Trade

September 7, 9: International Exchange

            -Reading: Text, Chapter 2 (including appendix)

            -Homework: Text problems 1-8
                                Workbook problems: 1-4

September 14, 16, 21: Production and Expanded Gains from Trade

            -Reading: Text, Chapter 3 (including appendix A, but not appendix B)

            -Homework: Text problems 1-4
                                Workbook problems: 1, 2, 6, and 8

September 23, 28: Simple Applications of the Basic Trade Model

            -Reading: Text, Chapter 4

            -Homework: Text problems 1-5
                                Workbook problems 1-3

First Midterm Exam: September 30 (To see sample exam answers, click here)

Part II: International Trade Patterns and Income Distribution

October 5, 7: The Ricardian Model

            -Reading: Text, Chapter 5

            -Homework: Text problems 1-5
                                Workbook problems 1, 2, 4 and 8

October 12, 14: The Ricardo-Viner (RV) Model

            -Reading: Text, Chapter 6

            -Homework: Text problems 1-4
                                Workbook problems 2-6

October 19, 21: The Heckscher-Ohlin-Samuelson (HOS) Model

            -Reading: Text, Chapter 7 (including appendices A and B)

            -Homework: Text problems 1 and 2
                                Workbook problems 1, 4, 5, and 6

October 26, 28: Trade, Growth and Product Variety

            -Reading: Text, Chapter 8

            -Homework: Text problems 1-3
                                Workbook problems 1, 2, and 6

Second Mid Term Exam: November 2 (To view sample answers, click here)

Part III: The Theory and Practice of Commercial Policy

November 4, 9: Economic Analysis of Tariffs

            -Reading: Text Chapter 10

            -Homework: Text problems 1-5
                                Workbook problems 1, 4, and 5

November 11, 16: Economic Arguments for Protection

            -Reading: Text Chapter 11

            -Homework: Text problems 1-3
                                Workbook problems 2, 3, 4, 6, and 8.

November 18, 23: Trade Policy and Imperfect Competition

            -Reading: Text Chapter 12 (including appendix)

            -Homework: Text problems 3-8
                                Workbook problems 5, 7, and 8

November 30, December 2: Issues in Contemporary Trade Policy, 1

            -Reading: Text Chapter 13

            -Homework: Text problems 1-7
                                Workbook Problems 1, 3, and 5

December 7, 9: Issues in Contemporary Trade Policy, 2--Preferential Trade Agreements

            -Reading: Text Chapter 14

            -Homework: Text problems 1-4, and 6

Final Examination: Friday, 17 December 1999, 8:00-12:00. (To view sample answers, click here)