Theory of comparative advantage and different models of international trade. Trade and welfare. Factor mobility and trade flows. Economic integration. Theory and practice of commercial policy. Prerequisite: 2.0 in ECON 301.
This is an intermediate course in the theory of international trade. Using the tools of microeconomic analysis, we study the basis and pattern of trade as well as the welfare and distributional impacts of free trade among various groups in the economy. We also study the reasons for limiting trade and discuss some of the current trade policy issues. Systematic study of the material in this course helps students develop the mental skills necessary to gain insight into the workings of an open economy as well as the state of past and current international economic order.
Student learning goals
1. Analyze the basis for mutually beneficial trade between countries and answer questions such as: what factors render free trade to be mutually beneficial to trading countries? How is the pattern of trade determined? How are the world prices of goods and services-- that are internationally traded-- determined?
2. Understand, analyze, and decipher the positive growth effects of free trade between countries from the (possibly undesirable) distributional outcomes.
3. Understand and analyze the relationship between the different types of international exchange: trade in goods and services versus movements of factors of production (e.g., migration of labor) between countries.
4. Understand and analyze the effects of limited trade (tariffs and non tariff barriers), the evolution of the world economic order toward freer trade and the creation of the World Trade Organization (as well as other recent issues such as the rise of outsourcing).
General method of instruction
Class assignments and grading