International Trade (Fall 18) PDF

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ECO 340...

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Hunter College CUNY, Fall 2018 International Trade: ECO 340.001, Code 21217 Mondays and Thursdays 11:10AM – 12:25PM, HW415 Instructor: Nathaniel Wright Email: [email protected] Office Hours: Mondays 1:00 – 2:00 PM, HW 1538 Prerequisites: ECO 200 and ECO 201 (C or better) Overview: This is a course about trade and exchange on a global scale. We will look at why actors enter global markets, what determines behavior in these markets, and the consequences of expanding international commerce. The goal of this course is to learn the necessary tools to examine global economic forces from a microeconomic perspective, although we will also be covering some macroeconomic/finance topics as well. We will start by making use of the standard classical and neoclassical models of international trade to examine the arguments for, and the consequences of, participating in international markets. We will use these models to inform on how a country can gain from trade, what determines specialization in production, the nature of balanced trade, and how an increase in trade will affect a country's technology, wages, and returns to capital when markets are functioning well. We will also examine the movement of labor and capital across countries and discuss the nature of global labor and capital markets. We will attempt to determine the consequences of migration and foreign direct investment. Initially, we will rely heavily on the assumptions of perfect competition, but as the semester continues, this will be less and less true, and we will discuss models of trade, growth, and political economy that paint a more complicated picture of the gains from trade and the role of governments in directing trade and investment. A special emphasis will be place on the effects of international exchange on workers. The scope of material for this class is necessarily broad, and there are longstanding points of contention around both the positive and normative aspects of international economics. We will spend the semester sifting through arguments from competing view points in order to fairly represent every side and evaluate the validity of opposing claims. Course Objectives: In addition to the learning objectives determined by the Hunter College department of economics for this course (which may be found at http://econ.hunter.cuny.edu/programs/courses-ofstudy/ba-in-economics/learning-goals-for-economics-major), by the end of this course you will 1. understand how the concept of comparative advantage can be applied to explain trade patterns and determine gains from trade. 2. understand what determines a country's terms of trade, trade balance, and the basics of how trade is organized and financed. 3. understand the role of resource endowments in determining how a country produces. 4. understand the relationship between capital and labor: to what extent are these inputs substitutes or complements? To what extent do workers and capitalists have compatible/opposing economic interests?

5. understand the controversy around off-shoring and outsourcing: what are the effects of offshoring and outsourcing on workers? 6. understand competing theories of the role of the government in directing trade, investment, migration, and promoting economic growth. 7. understand the role of multilateral institutions in facilitating trade and investment: why are institutions like the IMF and World Bank so controversial? 8. How does the introduction of “fair trade” and “direct trade” products change how trade is conducted? Course Text: There is one required textbook for the course (abbreviated as FT): Feenstra, R. and Taylor, A. (2014) International Trade, 3rd edition, Worth Publishers. In addition to the material assigned from the textbook, there will be weekly reading assignments posted on blackboard. All the additional readings, and lecture slides, will be posted on the blackboard site, which you should check regularly. Grading: Assignments_________________________________ 15%___________Check BB Exam 1 _____________________________________ 25%___________(10/04/18) Exam 2 _____________________________________ 25%___________(11/15/18) Final Exam __________________________________ 35%___________(12/17/18) Examinations: There will be three exams, two midterms and a final, both of which will be held in our regular classroom. There will be no make-up exams except in the case of a serious and documented emergency. In this case, I will need to be notified within 24 hours of the exam. Exams will all be closed book. No books, notes or electronic devices, except for simple calculators, will be allowed into the examination. The final exam is cumulative. The final exam will be held on Dec 17th, from 11:30AM to 1:30PM. Assignments: There will be five problem sets/response papers assigned over the course of the semester. Assignments are due at the beginning of class. Late assignments will not be accepted. If you cannot make it to class, you may submit assignments electronically so long as they are received before the beginning of class. As not all assignments will be equal in length, some assignments will be weighted more than others. Each assignment will be worth between 2 and 4 points. The maximum number of points you can get on a given assignment will be posted on blackboard with each assignment. You can get a maximum 15 points total on all assignments. There will be no make-up or extra credit assignments. Attendance/Participation There is no specific attendance requirement in this class, but you will not be able to do well on assignments or on exams without attending. Attendance will be taken at the beginning of class in the early part of the semester for the purpose of enrollment verification. If you do not attend a single class

are submit any work in the first several weeks, you will be marked as not enrolled. Also, please be considerate of classmates: arrive to class on time and be respectful and constructive during class discussions. Cell phones other electronic devices must be turned off before the class begins. You may not use a laptop during class, even for the purpose of taking notes. If you are seen texting, or engaging in any on-line activity (facebook, email, etc.), you will be penalized a full 2% off of your final grade for each incident. Academic Integrity Hunter College regards acts of academic dishonesty (e.g., plagiarism, cheating on examinations, obtaining unfair advantage, and falsification of records and official documents) as serious offenses against the values of intellectual honesty. The college is committed to enforcing the CUNY Policy on Academic Integrity and will pursue cases of academic dishonesty according to the Hunter College Academic Integrity Procedures. Office of AccessABILIty In compliance with the American Disability Act of 1990 (ADA) and with Section 504 of the Rehabilitation Act of 1973, Hunter College is committed to ensuring educational parity and accommodations for all students with documented disabilities and/or medical conditions. It is recommended that all students with documented disabilities (Emotional, Medical, Physical and/orLearning) consult the Office of AccessABILIty located in Room E1124 to secure necessary academic accommodations. For further information and assistance please call 212‐772‐4857. Hunter College Policy on Sexual Misconduct In compliance with the CUNY Policy on Sexual Misconduct, Hunter College reaffirms the prohibition of any sexual misconduct, which includes sexual violence, sexual harassment, and gender-based harassment retaliation against students, employees, or visitors, as well as certain intimate relationships. Students who have experienced any form of sexual violence on or off campus (including CUNY-sponsored trips and events) are entitled to the rights outlined in the Bill of Rights for Hunter College. a. Sexual Violence: Students are strongly encouraged to immediately report the incident by calling 911, contacting NYPD Special Victims Division Hotline (646-610-7272) or their local police precinct, or contacting the College's Public Safety Office (212-772-4444). b. All Other Forms of Sexual Misconduct: Students are also encouraged to contact the College's Title IX Campus Coordinator, Dean John Rose ([email protected] or 212-650-3262) or Colleen Barry ([email protected] or 212-772-4534) and seek complimentary services through the Counseling and Wellness Services Office, Hunter East 1123. CUNY Policy on Sexual Misconduct Link: http://www.cuny.edu/about/administration/offices/la/Policy-onSexual-Misconduct-12-1-14- with-links.pdf”

Topic

FT

1

Introduction: Institutions and Tariffs in the neo-classical models

8

2

The Ricardian Model: Differences in Technology

2

3

Comparative Advantage, Wages and Productivity

2

4

World Equilibrium Prices, Income Distribution and Growth

2

5

The Standard Trade Model

3

6

Product Prices, Factor Prices and sectoral adjustments

3

7

Trade, Income Distribution and Politics

3,4

8

The Hecksher-Ohlin Model: Differences in Factor Endowments

4

9

Income Distribution and Politics with Mobile Factors

4

10

Trade and the World Distribution of Income

4

11

Exam 1

12

Labor Movements: Migration and policy

5

13

Capital Movements: FDI and Multinationals

5

14

Trade, Growth and Development. Convergence or Divergence?

5

15

Increasing Returns to Scale: External Economies

6

16

Increasing Returns to Scale: Monopolistic Competition and Variety

6

17

Imperfect Competition and the Economics of “Dumping”

6

18

Outsourcing of Goods and Services

7

19

Trade Policy: Tariffs and Quotas

8

20

Import Substitution and Strategic Trade Policies in History

8,9

21

Historical experiences: Market failure and/or Government failure?

9

22

Exam 2

10

23

Subsidies and Trade: Agriculture and High-tech

10

24

Bilateral and Multilateral Trade Agreements

11

25

Labor and Safety Issues

11

26

Environment and Trade...