20842 - INTERNATIONAL TRADE AND GLOBALIZATION
Course taught in English
Go to class group/s: 31
Class-group lessons delivered on campus
To follow the course well, you should have some basic knowledge about solving constrained and unconstrained optimization problems, integral calculus and probability theory (especially continuous random variables). Furthermore, you should be familiar with basic microeconomic concepts such as General Equilibrium, and basic econometric concepts such as regression analysis and instrumental variables.
Globalization is a fascinating phenomenon – complex, interesting and constantly evolving - with important implications for economic policy and people's livelihoods. Brexit, the "trade war" between the United States and China, and the disruptions created by the Covid-19 pandemic are just the most recent examples of how international economic integrations affects veryday life. This course examines the causes and consequences of international trade and investment building on workhorse models and recent empirical evidence. It investigates why nations trade, what they trade, and how trade affects aggregate welfare and inequality. One of the great features of research in international trade is the interplay between theoretical models, rigorous empirical analysis and the use of quantitative methods. Theoretical models discipline our thinking and guide our empirical analysis. Empirical evidence guides the development of models and helps us distinguish between different economic mechanisms. Throughout the course we will put particular emphasis on this interplay between theoretical and empirical work. This course aims to familiarize students with the newest methodologies and findings in the field of international trade. Because of its methodological aspects, it may be particularly interesting for students thinking about a research career.
- The History of International Trade since the Industrial Revolution.
- Ricardian Trade Theory, from Ricardo to Eaton-Kortum.
- Heckscher-Ohlin Trade Theory.
- Increasing Returns and the New Trade Theory.
- Firm Heterogeneity: the Melitz model and its applications.
- New empirical insights on trade, development and inequality.
- Selected topics from current research in international trade and economic geography
- Define the concept of comparative advantage and understand how it shapes trade patterns.
- Describe the main reasons for international trade and their relative importance in reality.
- Explain the methodology used by modern economic models to quantify the gains from trade and the effects of changes in trade costs.
- Summarize the main insights obtained by models which introduce firm heterogeneity in international trade.
- Discuss the empirical strategies used to isolate a causal effect of international trade on national income and inequality.
- Solve the workhouse models of international trade.
- Analyze their main properties and comparative statics, both analytically and using specialized software (e.g. MATLAB).
- Evaluate and argument using a rigourous economic model and mathematical proofs.
- Develop an empirical strategy to assess the impact of international trade on economic outcomes.
- Read and critically discuss frontier research in international trade.
- Face-to-face lectures
- Exercises (exercises, database, software etc.)
- Group assignments
Regular problem sets allow students to apply the knowledge acquired during the lectures. These problem sets consist in theoretical and empirical exercises, which are to be solved either analytically or using a computer. They can be done in groups, and are discussed during dedicated sessions with the Teaching Assistant of the course. They also are graded.
The assessment for this course is based on problem sets and a final exam.
1. Problem sets can be completed in groups of up to three students, and count for 25% of the final grade, if and only if the problem set grade is higher than the final exam grade. If it is not, the final exam grade is also the grade for the course.
2. The final exam counts for 75% of the final grade, if and only if the problem set grade is higher than the final exam grade. If it is not, the final exam grade is also the grade for the course..
There is no textbook for this course. However, two books may be useful to you if you want more information, or a different perspective on the main subjects:
- Robert Feenstra, “Advanced International Trade: Theory and Evidence”, Princeton University Press, 2003.
- Elhanan Helpman, “Understanding Global Trade”, Harvard University Press, 2011.