Yale University, Department of Economics ECON 794: INTERNATIONAL TRADE POLICY Spring 2017 Professor Giovanni Maggi, giovanni.maggi@yale.edu. Office hours: by appointment, 37 Hillhouse, Rm 27 Prerequisites: first-year Ph.D. level Microeconomics sequence Course Description: This course focuses on theoretical and empirical research in international trade policy, and more specifically on three broad topics: (i) normative analysis: the welfare effects of trade policy; (ii) positive analysis: the political economy of trade policy; and (iii) international trade agreements. The only requirement for the course will be in-class presentations of recent academic papers. I. WELFARE ANALYSIS OF TRADE POLICY A. Dixit, "Tax policy in open economies," in A. Auerbach and M. Feldstein (eds.), Handbook of Public Economics, North Holland, 1985 E. Helpman and P. Krugman, Trade Policy and Market Structure, MIT Press, 1989, chs. 2-5 R. Baldwin, "The Case Against Infant Industry Protection," JPE 1969 A. J. Venables, Trade and trade policy with imperfect competition: the case of identical products and free entry, JIE 1985 J. Brander and B. Spencer, "Export subsidies and international market share rivalry," JIE 1985 J. Eaton and G. Grossman, "Optimal trade policy under oligopoly," QJE 1986 G. Maggi, Strategic Trade Policies with Endogenous Mode of Competition, AER 1996 C. Broda, N. Limao and D. Weinstein, Optimal Tariffs and Market Power: The Evidence, AER 2008 S. Berry, J. Levinsohn and A. Pakes, Voluntary export restraints on automobiles: evaluating a trade policy, AER 1999. II. THE POLITICAL ECONOMY OF TRADE POLICY D. Rodrik, "The political economy of trade policy," in G. Grossman and K. Rogoff, eds, Handbook of International Economics, vol.3, 1995. a. Voter preferences over trade policy W. Mayer, "Endogenous tariff formation," AER 1984
K. Scheve and M. Slaughter, What Determines Individual Trade-Policy Preferences? JIE 2001 P. Dutt and D. Mitra, "Endogenous trade policy through majority voting: an empirical investigation," JIE 2002 A.M. Mayda and D. Rodrik, Why are some people (and countries) more protectionist than others? European Economic Review, 2005 C. Freund and C. Ozden, Trade Policy and Loss Aversion, AER 2008 P. Conconi, G. Facchini and M. Zanardi, Policymakers Horizon and Trade Reforms: The Protectionist Effect of Elections, JIE 2014. 2 b. The role of lobbying A. Hillman, Declining Industries and Political Support Protectionist Motives, AER 1982 D. Trefler, "Trade liberalization and the theory of endogenous protection," JPE 1993 G. Grossman and E. Helpman, "Protection for sale," AER 1994 G. Grossman and E. Helpman, "Electoral competition and special interest politics," REStud 1996 D. Mitra, Endogenous lobby formation and endogenous protection: a long run model of trade policy determination, AER 1999 P. Goldberg and G. Maggi, Protection for Sale: an empirical investigation, AER 1999 D. Mitra, D. Thomakos and M. Ulubasolgu, Protection for Sale in a Developing Country: Democracy vs. Dictatorship, REStat 2002 R. Ludema, A.M. Mayda and P. Mishra, Protection for Free? The Political Economy of U.S. Tariff Suspensions, IMF Working Paper, 2011. III. TRADE AGREEMENTS G. Maggi, International Trade Agreements, in G. Gopinath, E. Helpman and K. Rogoff, eds, Handbook of International Economics vol.4, 2015. a. The terms-of-trade theory W. Mayer, Theoretical considerations on negotiated tariff adjustments, Oxford Ec. Papers 1981 K. Bagwell and R.W. Staiger, An Economic Theory of GATT, AER 1999
3 G. Grossman and E. Helpman, "Trade wars and trade talks," JPE 1995 K. Bagwell and R. Staiger, What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization, AER 2011 N. Limao and G. Maggi, Uncertainty and Trade Agreements, AEJ-Micro 2015. b. The domestic-commitment theory R. Staiger and G. Tabellini, Discretionary Policy and Excessive Protection, AER 1987 G. Maggi and A. Rodríguez-Clare, "The Value of Trade Agreements in the Presence of Political Pressures," JPE 1998 D. Mitra, Endogenous political organization and the value of trade agreements, JIE 2002 G. Maggi and A. Rodríguez-Clare, A Political-Economy Theory of Trade Agreements AER 2007 N. Limao and P. Tovar "Policy Choice: Theory and Evidence from Commitment via International Trade Agreements," JIE 2011. c. New Trade theories R. Ossa, A New-Trade Theory of GATT-WTO Negotiations, JPE 2011. K. Bagwell and R.W. Staiger, "Profit Shifting and Trade Agreements in Imperfectly Competitive Markets," IER 2012. P. Antras and R. Staiger, Offshoring and the Role of Trade Agreements, AER 2012 R. Ossa, "Trade Wars and Trade Talks with Data", AER 2014. d. Enforcement and dispute settlement K. Bagwell, K. and R.W. Staiger, A Theory of Managed Trade, AER 1990 G. Maggi, "The role of multilateral institutions in international trade cooperation," AER 1999 C. Bown and M. A. Crowley, "Self-Enforcing Trade Agreements: Evidence from Time-Varying Trade Policy," AER 2013 G. Maggi and R. Staiger, The role of Dispute Settlement Procedures in International Trade Agreements, QJE 2011
4 G. Maggi and R. Staiger, Learning By Ruling: A Dynamic Model of Trade Disputes, mimeo. e. The design of trade agreements K. Bagwell and R. Staiger, Domestic Policies, National Sovereignty and International Economic Institutions QJE 2001 H. Horn, G. Maggi and Robert Staiger, Trade Agreements as Endogenously Incomplete Contracts, AER 2010 M. Amador and K. Bagwell, "The Theory of Optimal Delegation with an Application to Tariff Caps," Econometrica 2013 G. Maggi and R. Staiger, Optimal Design of Trade Agreements in the Presence of Renegotiation, AEJ-Micro 2015. E. Bond and M. Beshkar, Cap and Escape in Trade Agreements, mimeo. f. Regional Trade Agreements G. Grossman and E. Helpman, The politics of free-trade agreements, AER 1995 P. Krishna, Regionalism and multilateralism: a political economy approach, QJE 1998 J. McLaren, A theory of insidious regionalism, QJE 2002 E. Ornelas, Rent destruction and the political viability of free trade agreements, QJE 2005 P. Aghion, P Antras and E. Helpman, Negotiating free trade, JIE 2007 A. Estevadeordal, C. Freund and E. Ornelas, Does regionalism affect trade liberalization towards non- Members? QJE 2008 N. Limao, Preferential trade agreements as stumbling blocks for multilateral trade liberalization: evidence for the U.S. AER 2006 g. Issue Linkage G. Maggi, Issue Linkage in International Agreements, in K. Bagwell and R.W. Staiger, eds, Handbook of Commercial Policy, forthcoming. S. Barrett, "The strategy of trade sanctions in international environmental agreements," Resource and Energy Economics, 1997.
B.R. Copeland, "Trade and environment: policy linkages," Environment and Development Economics, 2000. 5 J. Ederington, "Should Trade Agreements Include Environmental Policy," Review of Environmental Economics and Policy, 2010. I.J. Horstmann, J.R. Markusen, and J. Robles, "Issue Linking in Trade Negotiations: Ricardo Revisited or No Pain No Gain," Review of International Economics, 2005. N. Limão, "Trade policy, cross-border externalities and lobbies: do linked agreements enforce more cooperative outcomes?" JIE 2005. W. Nordhaus, "Climate Clubs: Overcoming Free-riding in International Climate Policy," AER 2015.