International Trade

International trade patterns are evolving rapidly, affecting both how countries interact and how we try to comprehend the nature of international transactions in an academic setting. Economics 4671 will attempt to cover a broad array of relevant topics over the duration of a (all-too-short) semester. In doing so, it will emphasize theoretical models and their policy implications, as well as empirical studies of how well those models fit “real world” data. Furthermore, the course will frequently compare and contrast alternative theories/conceptions of the nature of international trade and the gains or losses thereof. Understanding the economic intuition behind the technically demanding models as well as thinking critically about the assumptions behind the theories and how well they fit actual trading economies will be a major focus. We will use a standard textbook to identify and broadly comprehend the core set of theories that the final year graduate students of international trade would be exposed to during a typical course. We will then use different books, papers, articles, commentaries, empirical sources, etc. to explore the relevance of various trade theories/models to the world that we inhabit, both in terms of their logic-deductive structure and empirical performance, as well as their policy implications for growth, income distribution, and development. This course is being offered at a very interesting time. Income distribution and poverty have, in light of the occupy protests, become a major issue in the developing countries like Lesotho. Many blame trade treaties and liberalization at least partly for the rising income inequality witnessed in the developing countries and other rich economies over the last few decades. A number of low and middle income economies, on the other hand, are pursuing growth through trade pacts and liberalization. China ‘s emergence as a global exporting powerhouse continues even as critics blame its allegedly “unfair” trading practices for the soaring US trade deficits and for declining labor incomes and jobs. This course will provide an excellent opportunity to discuss some of these issues and to use formal theoretical tools to make sense of the arguments involved. Since it is not possible to cover all aspects of international trade in class, the lectures will focus on a “core” of major theoretical models and policy analyses. Student participation will be sought and encouraged. Topics covered include models of trade with constant returns and perfect competition, models of trade with variable returns and imperfect competition, positive and normative analyses of commercial policy, the political economy of trade policy, and topics related to offshoring/outsourcing. Lectures, class discussions, and assignments are geared toward developing competency in understanding and creating models of open economic systems.