Lecture 8 9 11 12 13 14 15 16 17 18 New: 19






Sep 28. Homework assignement on Wages in the Classical Model.

May 19. The subject matter of International Economics.

May 16. The importance of established advantage: Why does Qiaotou, China produce 60% of world buttons.

May 16. Wall Street Journal article on vertical farming and New York Times video about Newark vertical farm. The latter grows produce without sun or soil, using only water and LED lights. Sixteen acres of food grow on a floor measuring an eighth of an acre.

That same technology had been developed in Armenia already in 1970s.

May 15. Numerical example on Krugman's model of Monopolistic competition and Trade.

May 14. Increasing Returns to Scale and Trade.

May 13. Intertemporal approach to CAB.

May 4. Overall grades are published.

April 27. Answers to the 6th Quiz problems.

April 27. Answers to the Midterm problems.

April 24. Lecture slides on The Elasticity Approach to Current Account.

April 23. Open Economy Macroeconomics problem set.

April 23. Answers to the 5th Quiz.

April 17. Purchasing Power Parity problem set.

April 16. Monetary Model of Exchange Rate Determination problem set.

April 15.

1. Exchange rates in the Long run: PPP

2. Monetary approach to exchange rate determination

April 11. Foreign Exchange Transactions problem set.

April 10. A general note on research papers:

There is a huge difference between a research statement, and a political or a rhetorical statement.

Politicians may claim that they will increase the wages 10 times, or build walls 4 thousand miles long, or do whatever their wildest dreams may bear. If their voters or followers love these claims, then these politicians govern their part of the world, never ever bothering to prove or explain their claims.

But serious researchers and students, unlike politicians and con artists, should prove their claims. Thus, if you make a claim, please substantiate it with appropriate facts or reasoning. Excuse me, but that is the essence of research.

April 7. Problem set on Balance of Payments with solutions.

April 5. As of March 2017 U.K. held 310.3 tonnes of gold, which was the 17th biggest holding of official reserves in the world. Azerbaijan held 20 tonnes of gold (#62 in the world) (source: World Gold Council).

March 29. Today at the lecture I touched briefly to Median Voter Model. Here is its detailed treatment.

March 21. Two useful articles: the first on writing an outline, and the second on developing a thesis statement.

March 21. A detailed treatment of protrade economic growth.

March 15. The solution of one of the Quiz #2 exercises.

March 13. The analysis of Homework #7 results.

March 4. Homework #7 is on increasing returns and international trade.

March 2. The research paper should be 5-6 pages, double-spaced, 12-pt, Times New Roman.






Lecture 1: An Introduction to International Trade

Homework assignment #1

  • Organization of the course.
  • Main topics covered in the course.
  • Characteristics of national and global economies (gross national income, gross domestic product, goods and services trade, index of openness).
  • Purchasing power parity: How we compare income levels in different countries and why price levels are higher in high income countries?
  • Economic growth and international trade.
  • Direction, composition, and volume of international trade.
  • Gravity equation: How country size and distance define trade volume?

Reading assignments


Data sources






Lecture 2: International Trade Modeling Tools

Homework assignment #2

  • Basics of economic analysis (models, positive and normative analysis, general and partial equilibrium models).
  • Trade models' assumptions.
  • Condorcet paradox.
  • Model solution.
  • National supply and demand.

Reading assignments


Data sources






Lecture 3: Ricardian Model of Comparative Advantage

Homework assignment #3

  • Labor productivity and comparative advantage
  • Ricardo's model assumptions.
  • General equilibrium solution of Ricardo's model.
  • Gains from trade.
  • Trade and relative wages.

Reading assignments


Data sources






Lecture 4: Topics in Comparative Advantage

Homework assignment #4

  • Misconceptions about Ricardo's model
  • Many goods & 2 countries.
  • Many countries & 2 goods.
  • Comparative vs. absolute advantage.
  • Offer curves.
  • Derivation of National Supply & Demand Curves.

Reading assignments


Data sources

  • Please Note: Export concentration reflects the degree to which a country’s exports are concentrated on a small number of products or a small number of trading partners. A country that exports one product to only one trading partner has a perfectly concentrated export portfolio. Conversely, a country whose exports are comprised of a larger number of products and that trades with a larger number of trading partners has a lower export concentration ratio (ECR), i.e., has more diversified exports.
    See UNDP report on Export Concentration & Export Dependence.





Lecture 5: The Heckscher-Ohlin Model

Homework assignment #5

  • Heckscher-Ohlin theory within the framework of international trade theories.
  • Heckscher-Ohlin model assumptions.
  • Production possibilities frontier within the setting of Heckscher Ohlin model.
  • Heckscher Ohlin theorem graphical prove.

Reading assignments


Data sources






Lecture 6: The Heckscher-Ohlin Model Extensions

  • Factor Price Equalization Theorem.
  • Lerner Diagram.
  • Rybczynski Theorem.

Reading assignments


Data sources






Lecture 7: The Heckscher-Ohlin World: Further Extensions

  • Stolper - Samuelson Theorem.
  • Factor abundance in terms of factor prices.

Reading assignments


Data sources






Lecture 8: The Specific Factors Model

  • Ricardo-Viner Model Setting.
  • The effect of good price rise on factor incomes.
  • The impact of trade opening on income distribution.

Reading assignments


Data sources






Lecture 9: Testing Trade Theories & HOV Model

  • Leontief Paradox.
  • Input-Output tables.
  • Paradox explanations.
  • Heckscher-Ohlin-Vanek Model.
  • Leamer's definite critique of the Paradox.

Reading assignments


Data sources






Lecture 11: Basic Tariff Analysis

Homework assignment #6

  • Trade policy tools and governments' goals.
  • Basic tariff types.
  • Import tariff in a small country.
  • Export tariff in a small country.
  • Import tariff in a large country.
  • Optimal tariff.
  • Tariff escalation & Effective rate of protection.

Reading assignments


Data sources






Lecture 12: Quotas & Subsidies

  • Economic analysis of import quotas.
  • Import quotas vs. Import tariffs.
  • Production subsidies.
  • Export subsidies.

Reading assignments


Data sources






Lecture 13: Theory & Practice of Economic Integration

  • Multilateralism vs. Regionalism
  • Types of preferential trade arrangements
  • Customs union theory: Trade creation & diversion

Required Reading


Data sources






Lecture 14: Anti-dumping & Countervailing Duties

  • Anti-dumping & countervailing measures
  • Economic effects of dumping and foreign subsidies
  • Persistent dumping: International price discrimination
  • Price discrimination vs. One price

Required Reading


Data sources






Lecture 15: Effects of Economic Growth on Trade

  • Neutral, Pro- & Antitrade Growth
  • International Factor Mobility

Required Reading


Data sources






Lecture 16: Balance of Payments

  • BOP structure & main accounts
  • BOP identity
  • Principles and examples of recording transactions in BOP
  • Macroeconomic identities

Required Reading

Optional Reading


Data sources






Lecture 17: Foreign Exchange Market

  • FX market size, structure, currency & geographical distribution
  • Spot vs. forward
  • Fair forward rate
  • Currency futures
  • Foreign exchange swaps
  • Currency swaps
  • Currency options
  • Spot rate determination: FX demand & supply

Required Reading

Optional Reading


Data sources






Lecture 18: International Monetary System

  • Gold standard
  • Price-specie flow mechanism
  • Bretton Woods system
  • Triffin dilemma
  • Current system
  • Exchange rate arrangements classification

Required Reading

Optional Reading


Data sources






Lecture 19: Exchange rates in the Short run: Asset approach

  • Riskless arbitrage: Covered interest parity
  • Risky arbitrage: Uncovered interest parity
  • Test of Uncovered interest parity
  • UIP & Term structure of interest rates
  • Spot rate determination
  • Money market and Foreign exchange rate market linkage

Required Reading

Optional Reading


Data sources


Course SYLLABUS
Attendance, Grading & Paper Topics
  • Attendance: 1st sheet.
  • Homework grades: 2nd sheet.
  • Quizzes grades: 3rd sheet.
New: Paper Outlines
Calendar


You may ask a Question 24/7 From now on you may ask your questions 24/7.


Quiz #1: An assessment

Time left to send the research paper outline: