The course begins by developing the theory of comparative advantage to explain why nations trade. The question of who gains and who loses from international trade is addressed. The effects of tariffs, quotas, and other forms of protectionism are examined. The issues of trade blocs such as NAFTA and the European community and competitiveness are discussed next. Since trade between countries is conducted with different national currencies, we spend some time looking at the determinants of exchange rates. Opening up an economy to international trade creates several macroeconomic issues which we will examine. The emphasis throughout the course will be on the policy dimensions of the problem.
the additional readings will be distributed in class
Grading Ranges: 4.0 = 90.0-100% 2.0 = 70.0-74.9% 3.5 = 85.0-89.9% 1.5 = 65.0-69.9% 3.0 = 80.0-84.9% 1.0 = 60.0-64.9% 2.5 = 75.0-79.9% 0.0 = below 60.0%
Late assignments will not be accepted. Make-up exams will be given only when the absence of the student results from one of the following causes: illness (where the student is too ill to attend class), religious observance (where the nature of the observance prevents the student from being present during the class period), participation in university activities at the request of university authorities, and compelling circumstances beyond the student's control. Students requesting a make-up exam must furnish documentary support for their assertion that absence resulted from one of these causes.
Course incompletes are not normally offered. The course material is designed to be completed within the semester time frame.
Academic dishonesty will result in a grade of "0" for the course. Students may withdraw from the class through the eighth week of the semester. It is the student's responsibility to ensure that the withdrawal form is returned to the registrar's office. Thereafter, a student may withdraw only for medical reasons, supported by a written excuse from a physician. The expectation of a poor grade is not grounds for withdrawal after the eighth week.
Class participation is highly encouraged. Students are expected to contribute significantly to discussion voluntarily or when called upon.
Each class will end with a "minute paper". A minute paper consists of short responses to two questions: (1) "What was the most important thing you learned today?" and (2) "What didn't you understand?" Minute papers will be evaluated on the basis of quality and quantity.
Students will work in groups of 3 on a project assigned by the instructor. The project will consist of a 12 page paper and a 15 minute presentation to the class.
Finally, please feel free to come see me to ask questions or discuss difficult material. If my office hours are not convenient, you may set up an appointment for an alternative time.
Lindert & Pugel, Ch. 1, 2, 3
January 19 Winners and Losers from International Trade
Lindert & Pugel, Ch. 4, 5
January 26 Modern Trade Theories
Lindert & Pugel, Ch. 6
February 2 Tariffs and other forms of Protectionism
Lindert & Pugel, Ch. 7, 8, 9
February 9 Fair Trade; Trade Blocs
Lindert, Ch. 10, 11
Sheldon Friedman, "NAFTA as Social Dumping", Challenge, Sept./Oct. 1992, pp. 27-32.
Gary Clyde Hufbauer and Jeffrey J. Schott, "Prescription for Growth", Foreign Policy, Winter 1993-94, pp. 104-114.
John McMillan, Games, Strategies, and Managers, Oxford University Press, 1992, pp. 45-88.
March 9 Trade and the Environment; Political Economy of Trade Policy
Lindert & Pugel, Ch. 12, 14 (pp. 276-281 only)
Jagdish Bhagwati, "The Case for Free Trade", Scientific American, November 1993, pp. 42-49.
Robert Z. Lawrence, "Japan's Different Trade Regime: An Analysis with Particular Reference to Keiretsu", Journal of Economic Perspectives 7(3), Summer 1993, pp. 3-19.
Paul Krugman, "Protectionism: Try It, You'll Like It", International Economy, June/July 1990, pp. 35-39.
March 16 Foreign Exchange
Lindert & Pugel, Ch. 15, 16, 17
Jack L. Hervey, "The U.S. Trade Deficit: Is the Sky Really Falling?", Chicago Fed Letter, June 1995.
March 23 What Determines Exchange Rates?
Lindert & Pugel, Ch. 18, 19, 20
Michael R. Pakko and Patricia S. Pollard, "For Here or to Go? Purchasing Power Parity and the Big Mac", Federal Reserve Bank of St. Louis Review, Jan/Feb 1996, pp. 3-21.
Lindert & Pugel, Ch. 21, 22
Thomas Klitgaard and Karen Schiele, "The Growing U.S. Trade Imbalance with China", Federal Reserve Bank of New York Current Issues, May 1997.
April 20 More Open Economy Macroeconomics
Lindert & Pugel, Ch. 23, 24
April 27 Group Project Presentations