Simon Fraser University
Engaging the World

Course Outlines

Summer 2024 - ECON 342 D100

International Trade (3)

Class Number: 1332

Delivery Method: In Person

Overview

  • Course Times + Location:

    May 6 – Aug 2, 2024: Thu, 10:30 a.m.–12:20 p.m.
    Burnaby

  • Prerequisites:

    ECON 103 with a minimum grade of C- or ECON 113 with a minimum grade of A-; ECON 105 with a minimum grade of C- or ECON 115 with a minimum grade of A-; 60 units or permission of the department.

Description

CALENDAR DESCRIPTION:

Topics discussed in this course are: gains from trade in a classical world; the modern theory of international trade; factor price equalization; empirical tests and extensions of the pure theory model; economic growth and international trade; the nature and effects of protection; motives and welfare effects of factor movements; multinational enterprises; the brain drain; customs union theory; pollution control and international trade. Students with credit for ECON 442 cannot take this course for further credit. Quantitative.

COURSE DETAILS:

The course provides a survey of leading theories of international trade, in order to help students to acquire the ability to analyze the causes and consequences of international trade and implications of globalization. Then, it proceeds to examine recent policy debates through the lens of these theories.

COURSE-LEVEL EDUCATIONAL GOALS:

Topics:

Week #1: Preliminaries Reading:

Syllabus, Motivation, Plan of Attack. General equilibrium. Modeling assumptions.

PART I: COMPARATIVE ADVANTAGE

Week #2: The Basic Ricardian Model

Practice Problem Set #1 assigned. Comparative advantage, the production possibilities frontier, prices and supply.  

Patterns of trade, equilibrium prices and wages, gains from trade.

Week #3: Extending the Ricardian Model

Practice Problem set #2 assigned. Extending the Ricardian model to many goods.

  • R. Dornbusch, S. Fischer and P. A. Samuelson. “Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods.” The American Economic Review, 1977, vol. 67 issue 5, pp. 823-: Extending the Ricardian model to many goods and many countries.
  • J. Eaton and S. Kortum. “Putting Ricardo to Work.” The Journal of Economic Perspectives, 2012, Vol. 26, No. 2 (Spring 2012), pp. 65-89.
  • (*) J. Eaton and S. Kortum. “Technology, Geography, and Trade.” Econometrica, Vol. 70, No. 5 (Sep., 2002), pp. 1741-1779. Week #4: Testing the Ricardian Model &

Testing the Ricardian Model

  • A. Costinot and D. Donaldson. “Ricardo’s Theory of Comparative Advantage: Old Idea, New Evidence” American Economic Review Papers and Proceedings, 2012, vol. 102, issue 3, pp. 453- 458.
  • D. Bernhofen and J. C. Brown. "A Direct Test of the Theory of Comparative Advantage: The Case of Japan" Journal of Political Economy, Vol. 112, No. 1 (February 2004), pp. 48-67.

Midterm Exam

PART II: WINNERS AND LOSERS OF TRADE

Week #5: The Specific Factors Model Tuesday

Practice Problem Set #3 assigned.

Production possibilities frontier, equilibrium prices, wages, and labor allocation.

Trade equilibrium. Counterfactuals.

Week #6: The Heckscher-Ohlin Model

Practice Problem set #4 assigned.

Domestic equilibrium. Trade equilibrium

PART III: TRADE AND FIRMS

Week #7: Trade and Firms Tuesday

Practice Problem set #5 assigned. Trade under monopolistic competition

Firms and Trade: Empirical Facts

  • A. Bernard, J. Jensen, S. Redding, and P. Schott. “Firms in International Trade.” The Journal of Economic Perspectives, Vol. 21, No. 3 (Summer, 2007), pp. 105-130
  • D. Atkin, A. Khandelwal, and A. Osman. “Exporting and Firm Performance: Evidence from a Randomized Experiment.” Forthcoming. Quarterly Journal of Economics. Week #8: Heterogeneous firms & Midterm #2 Tuesday (2/20): Problem set #5 due at beginning of class. Heterogeneous Firms
  • M. Melitz and D. Trefler. “Gains from Trade when Firms Matter.” The Journal of Economic Perspectives, Vol. 26, No. 2 (Spring 2012), pp. 91-118.
  • (*) M. Melitz and S. Redding. “Heterogeneous Firms and Trade.” Handbook of International Economics, Volume 4, 2014, Pages 1–54. Midterm #2 Prep Thursday

PART IV: POLICY ANALYSIS WITH TRADE MODELS

Week #9: Gravity

Practice Problem set #6 assigned.

Gravity and Trade Costs.

  • J. Anderson and E. van Wincoop. “Trade Costs.” Journal of Economic Literature, Vol. 42, No. 3 (Sep., 2004), pp. 691-751 Thursday (3/1): Economic Geography. Trade within countries.
  • (*) T. Allen and C. Arkolakis. “Trade and the Topography of the Spatial Economy.” Quarterly Journal of Economics, Vol 129, No. 3, pp. 1085-1140. Week #10: Quantitative Trade Models Tuesday (3/6): Problem set #6 due at beginning of class. Take home final exam assigned.
  • (*) A. Costinot and A. Rodriguez-Clare. “Trade Theory with Numbers: Quantifying the Consequences of Globalization.” Handbook of International Economics, 2014, vol. 4, chapter 4, Gita Gopinath, Elhanan Helpman, and Kenneth Rogoff editors.
  • (*) S. Redding and E. Rossi-Hansberg. “Quantitative Spatial Economics.” Annual Review of Economics, forthcoming 2017, NBER Working Paper, 22655. 12:00pm EST

Week 9-14 Applications to policy analysis

Grading

  • Midterm 50%
  • Final Exam 50%

NOTES:

No makeup exams. With proper justification (medical or other emergencies) the students can skip the midterm and then the final will be worth 100%. Midterm will happen in class.

Materials

REQUIRED READING:

Krugman, Obstfeld, and Melitz. International Trade: Theory and Policy. 11 Edition, Pearson 2020.


Department Undergraduate Notes:

Please note that, as per Policy T20.01, the course requirements (and grading scheme) outlined here are subject to change up until the end of the first week of classes.

Final exam schedules will be released during the second month of classes. If your course has a final exam, please ensure that you are available during the entire final exam period until you receive confirmation of your exam dates. 

Students requiring accommodations as a result of a disability must contact the Centre for Accessible Learning (CAL) at 778-782-3112 or caladmin@sfu.ca.

***NO TUTORIALS DURING THE FIRST WEEK OF CLASSES***

Registrar Notes:

ACADEMIC INTEGRITY: YOUR WORK, YOUR SUCCESS

SFU’s Academic Integrity website http://www.sfu.ca/students/academicintegrity.html is filled with information on what is meant by academic dishonesty, where you can find resources to help with your studies and the consequences of cheating. Check out the site for more information and videos that help explain the issues in plain English.

Each student is responsible for his or her conduct as it affects the university community. Academic dishonesty, in whatever form, is ultimately destructive of the values of the university. Furthermore, it is unfair and discouraging to the majority of students who pursue their studies honestly. Scholarly integrity is required of all members of the university. http://www.sfu.ca/policies/gazette/student/s10-01.html