Course Meeting Times
Lectures: 2 sessions / week, 1.5 hours / session
Recitations: 1 session / week, 1.5 hour / session
This course provides a graduate-level introduction to the field of international trade. Topics include gains from trade, Ricardian models of technological differences, Heckscher-Ohlin models of factor endowment differences, intermediate input trade, wage inequality, imperfect competition, firm heterogeneity, multinational firms, international organization of production, dynamics, trade policy, trade and institutions, sorting in trade and foreign direct investment (FDI), and effects of geography on trade. This course is targeted to second-year PhD students in economics.
The prerequisites for this course include Intermediate Microeconomic Theory (14.04). Students are expected to have completed first-year PhD courses in Microeconomic and Macroeconomic Theory. I will not restrict enrollment but make sure you have an appropriate background.
There are no required textbooks. The reading list refers to the following books, which are very much worth buying, but will be on reserve at the library:
Grossman, Gene, and Elhanan Helpman. Innovation and Growth in the Global Economy. Cambridge, MA: MIT Press, 1991. ISBN: 9780262071369.
Helpman, Elhanan, and Paul R. Krugman. Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy. Cambridge, MA: MIT Press, 1987. ISBN: 9780262580878.
There will be four problem sets, one midterm exam, and one final exam. You will have about two weeks to complete each problem set. The exams will be closed book and closed notes. The midterm and final exams will take place during regular lecture hours.
|Problem sets (5% each)||20%|
|SES #||TOPICS||KEY DATES|
|I. Introduction: Trade facts and gains from trade|
|1||Trade facts and gains from trade|
|II. Technological differences: Ricardian models|
|2||Technological differences: Ricardian models||Problem set 1 out|
|3||Eaton and Kortum's (2003) Ricardian model|
|III. Factor endowment differences: Heckscher-Ohlin|
|4||The 2x2x2 Heckscher-Ohlin model: Part I|
|5||The 2x2x2 Heckscher-Ohlin model: Part II||Problem set 1 due|
|6||The generalized Heckscher-Ohlin model|
|IV. Empirical tests of the Heckscher-Ohlin model|
|7||Empirical tests of the Heckscher-Ohlin model||Problem set 2 out|
|V. Intermediate input trade and wage inequality|
|8||Intermediate input trade and wage inequality|
|VI. Imperfect competition: Theory|
|9||Trade, external scale economics and oligopoly|
|10||Trade and monopolistic competition|
|VII. Imperfect competition: Empirics|
|11||Trade and monopolistic competition: Empirics||Problem set 2 due|
|VIII. Firm heterogeneity|
|12||Intraindustry heterogeneity in trade models: Part I||Midterm exam 2 days after Ses #12|
|13||Intraindustry heterogeneity in trade models: Part II|
|IX. Multinational firms|
|14||Technological theories of foreign direct investment (FDI)||Problem set 3 out|
|X. International organization of production|
|15||The transaction-cost approach in international trade|
|16||The property-rights approach in international trade|
|XI. Dynamics of international trade|
|17||Dynamic trade theory I: Trade and neoclassical growth||Problem set 3 due|
|18||Dynamic trade theory II: Trade, technology, and growth||Problem set 4 out|
|19||Dynamic trade theory III: Innovation, technology transfer, and product cycles|
|XII. Trade policy|
|20||Trade policy I: Determinants of the structure of protection|
|21||Trade policy II: Tariff retaliation and the World Trade Organization (WTO)|
|22||Trade policy III: Regionalism versus multilateralism||Problem set 4 due and final exam 2 days after Ses #22|
Additional units, time-permitting, include Trade and Institutions, Sorting in Trade and Foreign Direct Investment (FDI), and Trade and Geography.