Sep. 28. Homework assignement on Wages in the Classical Model.
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 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 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. 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?
- Husted S., Melvin M., IE, Chapter 1: An Introduction to International Trade.
- NPR, Planet Money makes a t-shirt: The world behind a simple shirt.
- Donnan, S. (2013, Oct. 24). Trade: Into uncharted waters: A 30-year trend of trade growing at twice the speed of the global economy has ended. Financial Times.
- Wolf, M. (2016, Oct. 25). Sluggish global trade growth is here to stay: Political obstacles to big new liberalizing agreements have risen higher. Financial Times.
- MIT Observatory of Economic Complexity.
- World's main Exporting and Importing countries.
- World trade Product structure.
- Armenia's Export and Import commodity structure, as well as Export and Import markets.
- World Bank World Development Indicators Database.
- WTO World Trade Statistical Review 2016.
- Where an Airbus plane is made. The New York Times, Daily 360.
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.
- Husted S., Melvin M., IE, Chapter 2: Tools of Analysis for International Trade Models.
- Wolf, M. (2017, Jan. 24). Donald Trump and Xi Jinping’s battle over globalization. Financial Times.
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.
- Husted S., Melvin M., IE, Chapter 3: The Classical Model of International Trade.
- Krugman, P. (1996). Ricardo's Difficult Idea. MIT.
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.
- Obstfeld, M. (2017, Jan. 16). A Shifting Global Economic Landscape. IMF.
- IMF DataMapper: World Real GDP growth.
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.
- Husted S., Melvin M., IE, Chapter 4: Heckscher Ohlin Model.
- Eli Filip Heckscher. Britannica.
- "Bertil Ohlin - Biographical". Nobelprize.org.
- Bertil Gotthard Ohlin. Concise Encyclopedia of Economics.
- Bertil Ohlin: Swedish economist. Britannica.
- Bertil Ohlin. New World Encyclopedia.
- Credit Suisse Research Institute. (2016). The Global Wealth Report 2016. Kersley, R., Koutsoukis, A.
- Roser, M., & Ortiz-Ospina, E. (2017). Income Inequality. WorldInData.org
- Pew Research Center (2015). A Global Middle Class Is More Promise than Reality. Kochhar, R.
- Reuters (2012). The Swelling Middle. Rohde, D.
- Bremmer, I. (2016). These 5 Facts Explain the Unstable Global Middle Class. The Time.
- Kharas , H. (2016). How a Growing Global Middle Class Could Save the World's Economy. The Pew Charitable Trusts.
- Ernst & Young. (2013). Middle class growth in emerging markets.
Lecture 6: The Heckscher-Ohlin Model Extensions
- Factor Price Equalization Theorem.
- Lerner Diagram.
- Rybczynski Theorem.
- Alan V. Deardorff. (2001). Lerner Diagram. Deardorff's Glossary of International Economics.
- Maddison Project Database. GDP per capita from 1AD to 2010AD
- Looking to 2060: A Global Vision of Long-term Growth
Lecture 7: The Heckscher-Ohlin World: Further Extensions
- Stolper - Samuelson Theorem.
- Factor abundance in terms of factor prices.
- Peter J. Neary. (2004). The Stolper-Samuelson theorem. Prepared for Encyclopedia of World Trade Since 1450.
- The Economist. (2016, Aug 6). An inconvenient iota of truth. Economics Briefs.
- Giovanni Federico. The Growth of World Agricultural Production, 1800-1938.
- The Economist. Why China's agricultural system is inefficient
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.
- Alan V. Deardorff. (2001). Specific Factors Model. Deardorff's Glossary of International Economics.
- United Nations. World Population Prospects. Department of Economic and Social Affairs.
- World Population in 2050
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.
- Husted S., Melvin M., IE, Chapter 5: Tests of Trade Models: the Leontief Paradox and Its Aftermath.
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.
- Husted S., Melvin M., IE, Chapter 6: Tariffs.
- Alan V. Deardorff. Tariff in Partial Equilibrium. Deardorff's Glossary of International Economics.
Lecture 12: Quotas & Subsidies
- Economic analysis of import quotas.
- Import quotas vs. Import tariffs.
- Production subsidies.
- Export subsidies.
- Husted S., Melvin M., IE, Chapter 7: Nontariff Barriers and Arguments for Protection.
- Arman Gabrielyan. Trade Policy: Quotas & Subsidies (in Armenian).
- Yale Global Online. Four Contradictions of US Trade Policy.
- USDA. (2016). A Review of U.S. Tariff Rate Quotas for Beef Imports.
- USDA. Data & Analysis.
Lecture 13: Theory & Practice of Economic Integration
- Multilateralism vs. Regionalism
- Types of preferential trade arrangements
- Customs union theory: Trade creation & diversion
- Husted S., Melvin M., IE, Chapter 9: Preferential Trade Agreements.
- Arman Gabrielyan. The theory and welfare implications of customs unions. (in Armenian).
- Thomas Pugel. Trade Diversion versus Trade Creation in Joining a Trade Bloc. Interactive graph. International Economics.
- Jacob Viner. (2014). The customs union issue. OUP.
- WTO. Principles of the trading system.
- WTO. The General Agreement on Tariffs and Trade (GATT 1947).
- WTO. WTO legal texts.
- WTO. World Trade Report 2011: The WTO and preferential trade agreements: From co-existence to coherence.
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
- Husted S., Melvin M., IE, Chapter 8: Commercial Policy: History and Practice.
- Arman Gabrielyan. Trade Policy: Dumping (in Armenian).
- Thomas Pugel. Persistent Dumping. Interactive graph. International Economics.
- WTO. Anti-dumping, subsidies, safeguards: contingencies, etc.
- WTO. Anti-dumping.
- WTO. Subsidies and countervailing measures.
- WTO. World Trade Report 2016: Exploring the links between subsidies, trade and the WTO.
- WTO. World Trade Report 2012 Trade and public policies: A closer look at non-tariff measures in the 21st century.
- WTO. Agreement on Subsidies and Countervailing Measures.
- ITC. Export Promotion and the WTO.
- WTO. Introduction to Antidumping in the WTO.
- WTO. Statistics on anti-dumping.
- WTO. Statistics on subsidies and countervailing measures.
- World Steel Association. World Steel in Figures 2016.
Lecture 15: Effects of Economic Growth on Trade
- Neutral, Pro- & Antitrade Growth
- International Factor Mobility
- Husted S., Melvin M., IE, Chapter 10: International Trade and Economic Growth.
- Arman Gabrielyan. Economic Growth and Trade. (in Armenian).
- Thomas Pugel. Labor-Market Effects of Migration. Interactive graph. International Economics.
- Matthias Busse, Jens Königer. (2012). Trade and Economic Growth: A Re-examination of the Empirical Evidence. Hamburg Institute of International Economics.
- Kristian Skrede Gleditsch. Expanded Trade and GDP data.
Lecture 16: Balance of Payments
- BOP structure & main accounts
- BOP identity
- Principles and examples of recording transactions in BOP
- Macroeconomic identities
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
- Husted S., Melvin M., IE, Chapter 12: The Foreign Exchange Market.
- Garner, C. (2012). Currency trading in the forex and futures markets. FT Press.
- Marshall, J. F. (2001). Dictionary of financial engineering (Vol. 74). John Wiley & Sons.
Lecture 18: International Monetary System
- Gold standard
- Price-specie flow mechanism
- Bretton Woods system
- Triffin dilemma
- Current system
- Exchange rate arrangements classification
- Husted S., Melvin M., IE, Chapter 13: International Monetary System.
- IMF. (2014). Exchange Arrangements and Exchange Restrictions.
- World Gold Council. Gold data & statistics.
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
- Husted S., Melvin M., IE, Chapter 14: Exchange Rates in the Short Run.
- Arman Gabrielyan. Exchange rate determination (in Armenian).
- Chinn, M., & Frankel, J. (2002). Survey data on exchange-rate expectations. Monetary Policy, Capital Flows and Exchange Rates: Essays in Memory of Maxwell Fry, 13, 145.
- Wall Street Journal. London Interbank Offered Rates.