Syllabus
International Trade
ECON 845
Professor:  Bruce Elmslie
Spring Semester 2002
Office 423
Office Hours: TH 9:30-10:30 a.m.
Phone: 862-3347
E-mail: bte@hopper.unh.edu

    The purpose of this course is to allow students to become intimately acquainted with the pure theory of international trade and policy.  The method of instruction is lecture and discussion, covering classic articles as well as current literature.  The student will need to become familiar with current models, literature and controversies.   

Texts:       
       
        Kar-yiu Wong, International Trade in Goods and Factor Mobility, MIT Press, 1995.

        Elhanan Helpman, and Paul Krugman, Trade Policy and Market Structure, MIT Press, 1989.

        W. Max Cordon, Trade Policy and Economic Welfare, 2nd ed. Oxford University Press, 1998.  Recommended.  This is a classic text on trade policy.

        James R. Markusen, et al., International Trade Theory and Evidence, McGraw Hill, 1995.  Recommended.  Excellent for those not well versed in basic trade theory.


PLAN OF THE COURSE

Part I    Introduction, and Classical and Neoclassical Trade Theory, Wong Chapters 1 and 2, plus:

1."Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," by Dornbusch et al., AER, December 1977, Jstor

2."The Narrow Moving Band, the Dutch Disease, and the Competitive Consequences of Mrs. Thatcher:  Notes on Trade in the Presence of Dynamic Scale Economies," by Paul Krugman, Journal of Development Economics, 1987.

3."Leapfrogging in International Competition:   Theory of Cycles in National Technological Leadership," AER, December 1993, Jstor

4."Ricardo's International Trade Theory:  Beyond the Comparative Cost Example," by Andrea Maneschi, Cambridge Journal of Economics, 1992.

5."The Transfer Problem and Transport Costs," by P.A. Samuelson, Economic Journal, 1952, Jstor.

6."The Effects of a Booming Export Industry on the Rest of the Economy," by N.V. Long, Economic Record, 1983.

7."Adjustment in General Equilibrium: Some Industrial Evidence," by Farhad Rassekh and Henry Thompson, Review of International Economics, February 1997.

8."Weak Links in the Chain of Comparative Advantage," by Alan V. Deardorff, Journal of International Economics, May 1997.



Part II    a)    Factor Proportions Theory, Wong Chapter 3, plus:

9."The Leontief Paradox, Reconsidered," by Edward E. Leamer, Journal of Political Economy, 1980, Jstor.

10."A Test of the Heckscher-Ohlin-Vanek Theorem:  The Leontief Commonplace," by K.E. Maskus, JIE 1985.

11."International Factor Price Differences: Leontief Was Right!," by Daniel Trefler, Journal of Political Economy, 1993, Jstor.
 
12."The Case of the Missing Trade and Other Mysteries," by Daniel Trefler, AER, December 1995, Jstor.

13. “An Account of Global Factor Trade,” by Donald R. Davis and David E. Weinstein, AER, December 2001.

    b)    Capital Mobility, Wong Chapter 4, Sections 4.1, 4.2, 4.9.

Part III    Trade with Variable Returns and Imperfect Competition.

a)    External Economics of Scale, Wong Chapter 5, especially Sections 5.6, 5.7, 5.8, 5.10.

b)   Monopolistic Competition and Intraindustry Trade, Wong Chapter 6, plus:


15."International Trade in the Presence of Product Differentiation, Economies of Scale, and Monopolistic Competition: A Chamberlin-Heckscher-Ohlin Approach," by E. Helpman, JIE, 1981.

16."Imperfect Competition and International Trade:  Evidence from Fourteen Industrial Countries," by E. Helpman, Journal of the Japanese and International Economies, 1987.

17."The Structure of Foreign Trade," by Elhanan Helpman, NBER, October 1998.





c)    Oligopoly and Trade, Wong Chapter 7, plus:

18."A `Reciprocal Dumping' Model of International Trade," by J.A. Brander and P.R. Krugman, Journal of International Economics, November 1983.

Part IV    Trade, Technology and Growth

a)    Impact of Trade on Growth and Growth on Trade, Wong, Chapter 3, section 3.14.

“A Model of Innovation, Technology Transfer, and the World Distribution of Income, By P. Krugman, JPE, 1979, Jstor.

“Does Trade Cause Growth,” By Jeffrey Frankel and David Romer, AER, June 1999.

b)    Technology Gap Theory,

14."A `Technology Gap' Model of International Trade," by P. Krugman, in Rethinking International Trade, MIT Press, 1990.


Part V    Trade Policy and Distortions, Wong Chapters 8, 9, 10, 11; Helpman and Krugman, 1989 Chapter 1, plus:

19."The Generalized Theory of Distortion and Welfare," by J.N. Bhagwati, 1971.

20."Do Static Gains from Trade Lead to Medium-Run Growth?" by Joy Mazumdar, Journal of Political Economy, 1996.


Part VI    Strategic Trade Policy, Wong Chapter 12; Helpman and Krugman, 1989, plus:

22."Free Trade vs. Strategic Trade:  A Peek into Pandora's Box," by G.M. Grossman and G. Maggie, NBER, October 1997.

23."Mercantilism as Strategic Trade Policy:  The Anglo-Dutch Rivalry for the East India Trade," by Douglas A. Irwin, Journal of Political Economy, 1991, Jstor.

24."The Political Economy of Trade Policy," by R.E. Baldwin, JEP, 1989, Jstor.

25."Protection for Sale: An Empirical Investigation," by Pinelopi Koujianou Goldberg, and Giovanni Maggi, The American Economic Review, December 1999.

26."Trade, Social Insurance, and the Limits to Globalization," by Dani Rodrik, NBER, January 1997.

27."Poisoned Grapes, Mad Cows, and Protectionism," by Eduardo Engel, NBER, February 1999.



GRADING

1.    A term paper on a topic of the student's choosing is expected.  This paper counts 30%.  A topic will be selected by the student and confirmed by the instructor by March 5, 2002.  A completed first draft of the paper may be handed in on April 23, 2002.  The revised and completed paper is due on the last day of class, which is May 9, 2002.

2.    We will have two midterm exams counting 30%.

3.    We will also have a comprehensive final counting 25%.

4.    The other 15% is made up of homework and class participation.  The students are required to give some lectures. 

EXAMS

    The first midterm will be on or about February 28, 2002 and the second mid term will be on or about April 16, 2002.  The final is scheduled on Monday, May 20 from 8:00-10:00 a.m.