Objectives of the course
This course will provide students with the analytical tools that are essential to understand the process of globalization through the international trade in goods. Lectures will focus on the key topics that are at the center of the policy debate: why do countries open to trade? What are the effects of free trade on the process of economic development and inequality? Why do countries restrict the exchange of goods, and what can we say about the effects of protectionism on trade and welfare?
At the end of the course, students are expected to have a good knowledge of the mechanisms and predictions from the traditional models of trade, and from the New Trade Theory. Students will also be able to read simple research articles that can be used for the writing of policy notes.
The 8 courses of 3 hours each (24 hours) . The last lecture takes place on the 28th of October.
The lectures will be organized as follows: the lectures will be designed to treat the main topics of the course. Farid Toubal will be in charge of the first part of the course, which will give an overview of the main theories in international trade. Thierry Mayer will be in charge of the second part of the course covering gravity equations as a tool for analyzing trade integration, and economic geography that has been an important component of recent international economic analysis. Two topics relevant to the more general PSIA themes will close the lecture: how globalization affects military conflicts and cultural patterns.
Grades are based a mid-term exam (50%) and a final exam (50%). The Midterm will take place on the 22nd of October between 13:30-15:30. The final exam takes place in December.
Last year midterm
Main textbook and additional readings
Krugman P, Obstfeld M. (2008). International Economics: Theory and Policy. Pearson
Combes P.P, Mayer T. and J., Thisse (2008) Economic Geography, Princeton University Press
Additional reading may complete the K-O and CMT chapters and will be provided before the lectures. Feenstra provides an advanced lecture for aficionados.
Feenstra (2009). Advanced International Trade: Theory and Evidence. Princeton University Press.
Telos and Vox are two blogs that publish research-based policy articles from leading economists. A lot of the articles cover trade-related topics.
Chapters of the course
The 5 first chapters will be taught by F. Toubal, the last ones by T. Mayer
- Globalization: some historical perspective (2 hours) – Print
- K-O chapter 2: “World trade, an overview”
- Baldwin, R. And Martin, P. (1999): “Two waves of globalization: superficial similarities, fundamental differences”, NBER Working Paper 6904
- Kevin O'Rourke and Jeffrey Williamson. Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy, MIT Press.
- The balance of payments: accountability and global (im)balances (2 hours) – Print
- K-O chapter 12: “National income, accounting and the balance of payments”
- Paule DeGrauwe, “Dette : l’explosion est-elle gérable?”, Telos octobre 2009
- Gian Maria Milesi-Ferretti, “The US current account and the dollar”, vox 12 December 2008
- IMF World Economic Outlook, 2007, “Exchange rates and the adjustment of external imbalances”
- Gourinchas, P-O and H. Rey (2005). From world banker to world venture capitalist: US external adjustement and the "exhorbitant privilege", in G7 Current Account Imbalances: Sustainability and Adjustment", Richard Clarida editor, University of Chicago Press, 2007, p.11-55.
- Baldwin, R and D. Taglioni (2009). The illusion of improving global imbalances, Vox-EU November.
- Obstfeld, M. and K., Rogoff, (2009). Global Imbalances and the Financial Crisis: Products of Common Causes.
- Ricardo: productivity and the comparative advantage (2 hours) – Print
- Heckscher, Ohlin and Samuelson: trade and wages (4 hours) – Print
Monopolistic competition and international trade between similar countries (2 hours) – Print
- K-O chapter 4: "Resources, comparative advantage, and income distribution"
- Paul Krugman: "Trade and inequality, revisited", Vox 15th June 2007
- Hervé Boulhol : « Mondialisation et inégalités : le débat continue », Telos 23 june 2008
- Alan S. Blinder : "On the measurability of offshoring", Vox 9 October 2009
- Avraham Ebenstein, Ann Harrison, Margaret McMillan and Shannon Phillips, "International trade, offshoring and US wages", Vox 31 August 2009
Gravity as a tool for measuring integration (2 hours) – Print
Economic Geography – Theory (2 hours) – Print
- K-O chapter 6: "Economies of Scale, Imperfect Competition and International Trade"
- Philippe Martin, Thierry Mayer et Florian Mayneris, "Natural clusters: why policies promoting agglomeration are unnecessary?", Vox 4th July 2008
- Lionel Fontagné, Michael Freudenberg et Guillaume Gaulier , “Disentangling horizontal and vertical intra-industry trade”, CEPII Working Paper N.2005-10
- Feenstra, Chapter 2 & Chapter 10
- Christian Broda and David Weinsteinn, 2006. Globalization and the Gain from Trade. Quarterly Journal of Economics, 121: 541-585.
Economic Geography – Empirics (4 hours) – Print
- Fujita, Krugman and Venables (1999), chapters 4 and 5
- CMT, chapters 4 and 5
Trade and political disputes (2 hours) – Print
- CMT, chapters 10 to 13
- Head, K., and T. Mayer, 2004, ``The Empirics of Agglomeration and Trade", chapter 59 in the Handbook of Regional and Urban Economics Vol. 4 edited by V. Henderson and J.F. Thisse.
Trade and cultural diffusion (2 hours) – Print
- Martin P., Mayer T., Thoenig M., 2006, ``La mondialisation est-elle un facteur de paix ?'' Opuscule du CEPREMAP 3. Paris : Ed. ENS rue d'Ulm,, 53 p.
- Guizo, Sapienza and Zingales, 2009, Cultural Biases in Economic Exchange?, Quarterly Journal of Economics, August 2009, Vol. 124, No. 3: 1095-1131.
- Maystre A., Olivier J., Thoenig M. & Verdier T. (2009). Product-based cultural change: is the village global? (7438). CEPR.