INTERNATIONAL TRADING RELATIONS
Professor: Douglas Nelson
Office: 108 Tilton Hall
Office Hours: TR 3:30-5:00, and by appointment
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. While the neoclassical model provides a solid basis for beginning an analysis of the international economy, recent advances in theory and research permit us to go well beyond that model in our analysis. Thus, the course finishes with a number of topics from the frontier of modern research on international trade.
The primary reading material for this course will be found in the following textbook (which can be purchased online or at the Tulane University bookstore):
Robert Feenstra and Alan Taylor (2008). International Trade. New York: Worth. (Text)
Supplementary material, including the homework problems, can be found in:
Stephen Yeaple (2008). Study Guide for International Trade, with Worked Examples. New York: Worth. (Study Guide).
Textbook webpage: http://www.worthpublishers.com/feenstrataylor (Webpage)
The text and study guide are available from Amazon for $97.95: follow this link
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 knowledge consistent with high school algebra and geometry.
Evaluation. Your performance in this course will be evaluated on the basis of two examinations and eleven homework assignments. Each examination will be worth 100 possible points and your homework will be worth 100 possible points. To earn a grade in the A range you must earn at least 90 percent of the 300 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. Both exams will have the following format: about 40% short answer questions and about 60% problems/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). Exams must be written in blue books, which you must supply. Sample exams will be available at on blackboard.
The midterm exam will be given on 13 March 2008. The final examination will only be given on the scheduled date: Tuesday 6 May 2008, 1:00-5:00. Unless you have a standard university accepted excuse for missing the exam (e.g. health with standard university form), you must take the exams at their scheduled time. In particular, holiday/travel plans are not an acceptable excuse. Failure to take the exam on the scheduled date will result in a score of 0.
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. You will earn credit for every problem that you attempt. [Note: “attempt” means that you submit, on time, a written response to the question containing an answer and an explanation as to why the answer is correct, which is recognizably (by me) a response to the relevant question. Answers without explanations, whether or not they are correct, will earn zero points and will not be treated as an attempt.] I will not be able to provide detailed marking of your homework.
Nothing helps develop skills like practice. I have also had the bookstore order Stephen Yeaple’s Study Guide, which has additional exercises, with full answers at the back.
Additional Exam and Homework Information: Exams will be returned in class, homework must be picked up at my office, or at the Homework review. 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. Try to do the starred problems before looking at the answers in the study guide, this is a great way to figure out how you are doing before turning your homework in.
Third, doing problems is a great way to build your skills with the various models we develop. The study guide contains a number of additional problems, with answers. Especially if you are feeling uncertain about your grasp of some material, you should do as many problems as you can.
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.
Fifth, 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.
ECN 433-01 SYLLABUS Spring 2008
January 15, 17: Course Introduction–Globalization
-Reading: Text, Chapter 1
Part I: Canonical Models of International Trade
January 22, 24: Ricardian Model, I
-Reading: Text, Chapter 2, pp. 27-45
-Homework: Questions 2.1-2.6.
January 29, 31: Ricardian Model, II
-Reading: Text, Chapter 2, pp. 45-57.
-Homework: Questions 2.7-2.12.
February 5: No Class [Mardi Gras Break]
February 7, 12: Specific Factors and Trade, The Ricardo-Viner Model
-Reading: Text, Chapter 3
-Homework: Questions 3.1-3.12
February 14, 19: Factor-Intensities and Trade, The Heckscher-Ohlin Model, I
-Reading: Text, Chapter 4, pp. 95-120
-Homework: Questions 4.1-4.6
February 21, 26: Factor-Intensities and Trade, The Heckscher-Ohlin Model, II
-Reading: Text, Chapter 4, pp. 110-134 and Appendix.
-Homework: Questions 4.7-4.12.
February 28, March 6:The Economics of International Factor Mobility
-Reading: Text, Chapter 5.
-Homework: Questions 5.1-5.13.
No Class: 11 March
Midterm Exam: 13 March 2008
Spring Break, No Class 18, 20 March
Part II: Extending the Neoclassical Model
March 25, 27: Monopolistic Competition and International Trade
-Reading: Text, Chapter 6, pp. 185-215
-Homework: Questions 6.1-6.9.
April 1: Dumping and Anti-dumping in International Trade
-Reading: Text, Chapter 6, pp. 215-223.
-Homework: Questions 6.10-6.13.
April 3, 8: Outsourcing in International Trade
-Reading: Text, Chapter 7
-Reading: Bernard, Jensen, Redding and Schott (2007): “Firms in International Trade”. Journal of Economics Perspectives; V.21-#3. [Blackboard]
-Homework: Questions 7.1-7.13.
April 10, 15: Economics of Protection, I: Perfect Competition
-Reading: Text, Chapter 8
-Homework: Questions 8.1-8.13.
April 17, No Class
April 22, 24: Economics of Protection, II: Imperfect Competition
-Reading: Text, Chapter 9
-Homework: Questions 9.1-9.13
April 29: Economics of Protection, III: Export Subsidies (optional)
-Reading: Text, Chapter 10
Final Examination: Tuesday, 6 May 2008, 1:00-5:00.