Welcome to Econ3613.
The first learning objective of this course is for students to learn how trade affects prices and the allocation of resources across countries, and how nations may gain or lose from trade. The second learning objective of this course is for students to learn about the contemporary challenges in trade policy. To achieve these learning objectives, we start from classical models of trade. At the same time, we survey the ongoing developments in US trade policy. We then study a standard trade model. We continue with new trade models under increasing return to scale. And we conclude our survey by looking at the most recent models that describe firms’ export decisions and multinational production. We further examine selected trade policy instruments such as tariffs and quotas, and we study the welfare effects of such policies. To conclude this course, we examine a selected number of arguments for and against free trade, and we examine the contemporary challenges in trade policy. For more details, you may refer to the syllabus.
This course relies heavily on selected readings from a textbook by Steven Husted and Michael Melvin as well as a textbook by Paul Krugman, Maurice Obstfeld, and Marc Melitz. We also use another textbook by James Gerber. Towards the end of the lecture series, students are introduced to two other books: one by Elhanan Helpman and one by Pol Antras.
We begin this lecture series by exploring the current state of economic activities across different countries. This part of lecture is based on Chapter 1 in Husted and Melvin’s textbook. Given the outline of that chapter, students are asked to explore the most current data to update some of the key figures that are reported in Husted and Melvin’s book.
Considering the recent developments in US trade policy, we also survey the ongoing events from the beginning of this lecture series. Students will be asked to go over some readings, listen to some net-casts, and engage in in-class discussions and group activities that are designed to improve their understanding of the scope and consequences of ongoing changes in US policy.
- Few useful data resources:
- Trump’s trade war
- More links to further readings and podcasts on recent development in US trade policy
Modelling international trade
We begin this section with a brief survey of some analytical tools. This part of lecture is based on Chapter 2 in Husted and Melvin’s textbook.
The above-mentioned tools are useful in modeling international trade. We use those tools to survey two sets of models:
- Classical models: lecture presentations and some highlights
- This part of the lecture is based on Chapter 3 in Husted and Melvin’s textbook.
- Standard models: lecture presentations and some highlights
- This part of the lecture is based on Chapter 6 in Krugman, Obstfeld, and Melitz’s textbook.
We conclude with this article about Stolper-Samuelson theorem.
Given what we learned from classical and standard treatments of trade theory, we survey contemporary models:
- New trade model: lecture presentations and some highlights
- This part of the lecture is based on Chapter 7 in Krugman, Obstfeld, and Melitz’s textbook.
- Let’s play a role-playing game
- You are the elected representatives in a small open economy. Some of you are independent, while others are supported financially by different industries. For instance, the steel industry pays for some of your campaigns. The rest might be supported by other industry groups; e.g., chemical productions, computer and electronics, automobile industry, etc. (Details will be determined in class.) You need to make a decision upon a request by the steel industry lobby to protect their industry against imports over the next decade, so they could prepare their industry to become a leading global exporter. How would you vote on this bill?
- New new trade model: lecture presentation and some highlights
We conclude this part with a survey of developments in multinational production. These concluding remarks are also based on Chapter 8 in Krugman, Obstfeld, and Melitz’s textbook.
The last part of this lecture series will focus on trade policy, including a brief survey of:
- We have so far kept an eye on recent developments in US trade policy
- We are now prepared to examine a simple model for common commercial policy instruments
- Some useful Trade Talk Podcast episodes:
- Happy 70th GATTiversary: the origins of multilateral trade (10/27/2017)
- Did protectionism make America great? (02/15/2018)
- Trade wars and the Smoot-Hawley tariffs: what really happened? (03/20/2018)
- How do Trump’s tariffs stack up historically? (07/13/2018)
- Are Trump’s steel quotas worse than his steel tariffs? (08/01/2018)
- It is fun to discuss the USMCA, the new NAFTA (10/05/2018)
- How big is the USMCA? It’s uncertain (04/27/2019)
- What are trade deals for? Dani Rodrik does Trade Talks. Part one, two, three, and four
- Uncertainty and trade deals — not good (10/04/2017)
- So you want to be a trade negotiator (04/20/2018)
- We also need to review the arguments for and against free trade
There are two exams, a midterm and a final. Previous exam samples include:
- midterm exams for Summer 2016, Summer 2017, and Summer 2018
- final exams for Summer 2016, Summer 2017, and Summer 2018
When it comes to final letter grade calculation, the exams have 80% weight. For a given student, 45% weight will be allocated to the exam with higher grade, and 35% weight will be allocated to the exam with lower grade. Daily in-class quizzes contribute to the remaining of your final letter grade. For more, refer to the syllabus.