Spring semester 2012 Credit: 3 ECTS (Master in Economics) Advanced International Trade Schedule: Wednesdays, 17:15-19:00, room M 5250 Uni Mail Course description: In this course we will discuss topics in the area of international trade and trade policy. We will review traditional theories of international trade and recent developments in the economic literature based on the New new trade theory and on the analysis of FDI and global production chains. The discussion of trade policy will cover diverse topics such as export restrictions, the economics of trade agreements and the political economy of trade policy. The suggested textbook for this course is: Feenstra, R. (2004). Advanced International Trade: Theory and Evidence, Princeton University Press Students are expected to read selected articles (denoted by a *) and actively participate in class discussion. At the end of the semester, each student will deliver an oral presentation. This presentation should be a synthesis of several scientific articles on a given topic or, preferably, an in-depth discussion of a paper chosen in accordance with the instructor. Topics: 1. Comparative Advantage, Gains from Trade, International Equilibrium and Ricardo *Feenstra, Chapters 1-3. R. Dornbusch, S. Fischer, and P. A. Samuelson, Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods, American Economic Review, 67 (1977), 823-839. Eaton, J. and S. Kortum, Technology, Geography, and Trade, Econometrica, September 2002, Vol. 70, No. 5, 1741-1780. Donaldson, Dave (2010), Railroads of the Raj: Estimating the Impact of Transportation Infrastructure, mimeo MIT. Costinot, Arnaud, Donaldson, Dave "How Large Are the Gains from Economic Integration? Theory and Evidence from U.S. Agriculture, 1880-2002" August 2011. Preliminary Draft see Donaldson's website 2. Monopolistic Competition and Trade *Feenstra, Chapter 5 1
*Krugman, P., Increasing Returns, Monopolistic Competition, and International Trade, JIE (Nov. 1979). Krugman, P. Scale Economies, Product Differentiation and the Pattern of Trade, American Economic Review, (1980). Helpman, E., International Trade in the Presence of Product Differentiation, Economies of Scale, and Imperfect Competition: A Chamberlin-Heckscher-Ohlin Approach, Journal of International Economics (1981). McCallum, J., "National Borders Matter: Canada-US Regional Trade Patterns," American Economic Review (1995) Feenstra, Robert C., 2010, Measuring the Gains from Trade under Monopolistic Competition, Canadian Journal of Economics, February, 1-28. 3. Heterogeneous Firms *Melitz, M.J., The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity, Econometrica (Nov. 2003). *Chaney, Thomas, Distorted Gravity: Heterogeneous Firms, Market Structure and the Geography of International Trade, American Economic Review, September 2008, Vol. 98, No. 4. Bernard, Andrew B., Stephen Redding, Peter K. Schott, Comparative Advantage and Heterogeneous Firms, Review of Economic Studies, 2007, vol 74, January. Arkolakis, Costas (2008), "Market Penetration Costs and the New Consumers Margin in International Trade," NBER working paper 14214 Bernard A. and J. B. Jensen (2004), Why Some Firms Export, The Review of Economics and Statistics, Vol. 86, No. 2. Eaton, Jonathan, Samuel Kortum, and Francis Kramarz (2008), An Anatomy of International Trade: Evidence from French Firms NBER Working Paper #14610. 4. FDI *Brainard, L. (1997). "An Empirical Assessment of the Proximity-Concentration Trade-off Between Multinational Sales and Trade." American Economic Review 87(4), p.520-44. *Helpman, E. (1984). "A Simple Theory of International Trade with Multinational Corporations." Journal of Political Economy 92(3), p.451-71. Helpman, E., Melitz, M. and S. Yeaple (2004). "Exports versus FDI with Heterogeneous Firms." American Economic Review 94(1), p.300-16. Brainard, S. Lael (1993), "A Simple Theory of Multinational Corporations and Trade with a 2
Trade-off between Proximity and Concentration," NBER Working Paper 4269. Boston Consulting Group (2006), "The New Global Challengers: How 100 Top Companies from the Rapidly Developing Economies are Changing the World," Boston: The Boston Consulting Group. Markusen, J. and A. Venables (2000). "The Theory of Endowment, Intra-industry and Multi-national Trade." Journal of International Economics 52, p.209-34. Fajgelbaum Grossman Helpman (2012) "A Linder Hypothesis for Foreign Direct Investment" working paper Carr, D., Markusen, J. and K. Maskus (2001). "Estimating the Knowledge-Capital Model of the Multinational Enterprise." American Economic Review 91(3), p.693-708. Nunn, N. (2007). "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade." Quarterly Journal of Economics 122(2), p.569-600. Acemoglu, D., Antràs, P. and E. Helpman (2007). "Contracts and Technology Adoption." American Economic Review 97(3), p.916-43. 5. Global Production *Helpman, E., Trade, FDI, and the Organization of Firms, JEL (Sept. 2006). *Pol Antràs, 2003. "Firms, Contracts, And Trade Structure," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1375-1418, November. Helpman, Elhanan (1984), A Simple Theory of International Trade with Multinational Corporations, Journal of Political Economy, 92:3, pp. 451-471. Antras, P. and E. Rossi-Hansberg, Organizations and Trade, Annual Review (Sept. 2009). Antràs, P. and E. Helpman (2004). "Global Sourcing." Journal of Political Economy 112, p.552-80. Yeaple, S. (2006). "Foreign Direct Investment, and the Structure of U.S. Trade." Journal of the European Economic Association 4, p.602-11. Yi, Kei-Mu Can Vertical Specialization Explain the Growth of World Trade? Journal of political Economy, 2003 (2003) Helpman, E., M.J. Melitz and S.R. Yeaple, Exports versus FDI with Heterogeneous Firms, AER (March 2004). Antras, Garicano and Rossi-Hansberg (2006) "Offshoring in a Knowledge Economy" Quarterly Journal of Economics, February 2006. 6. Trade in Tasks *Grossman and Rossi-Hansberg (2008) Trade in Tasks: A Simple Theory of Offshoring, AER 3
*Grossman and Rossi-Hansberg (2010) Task Trade between Similar Countries, working paper Costinot Vogel Wang (2011) An Elementary Theory of Supply Chains Working Paper Autor, Levy and Murnane 2003 The Skill Content of Recent Technological Change: An Empirical Exploration. Quarterly Journal of Economics, 118(4), Edward E Leamer & Michael Storper, 2001. "The Economic Geography of the Internet Age," Journal of International Business Studies Alan S. Blinder, 2009. "How Many US Jobs Might be Offshorable?," World Economics, World Economics, Economic & Financial Publishing, PO Box 69, Henley-on-Thames, Oxfordshire, United Kingdom, RG9 1GB, vol. 10(2), pages 41-78, April 7. Political Economy of Trade Policy *Feenstra Chapter 9 *Grossman Helpman "Protection for Sale" AER September 1994 Freund, C. and C. Ozden (2008). "Trade Policy and Loss Aversion". American Economic Review, 98:4, 1675-91. Limao, N. and P. Tovar Policy Choice: Theory and Evidence from Commitment via International Trade Agreements, Journal of International Economics. November 2011, 85(2), p. 186-205 Ludema, R., A. Mayda and P. Mishra, Protection for Free? The Political Economy of U. S. Tariff Suspensions, mimeo, Georgetown (June 2010). Saggi, K. and H. Yildiz, Bilateralism, Multilateralism and the Quest for Global Free Trade, JIE (forthcoming). 8. Export Policy *Giordani, P., N. Rocha and M. Ruta (2012). "Export Policy and Food Price Escalation". Mimeo, WTO Anderson, K. and W. Martin (2011). "Export Restrictions and Price Insulation during Commodity Price Booms". World Bank Policy Research Working Paper No. 5645. Bagwell, K. and R.W. Staiger (2001). "Strategic Trade, Competitive Industries and Agricultural Trade Disputes". Economics and Politics, 13: 113-28. Bouet, A. and G. Laborde (2010). "Economics of Export Taxation in the Context of food Crisis: A Theoretical and CGE Approach Contribution". International Food Policy Research Institute, Discussion Paper No. 00994. Ivanic, M., Martin W. and A. Mattoo (2011). "Welfare and Price Impacts of Price Insulating Policies". Mimeo, World Bank. 9. Theory of Trade Agreements 4
*Bagwell Staiger (1999) "An Economic Theory of the GATT" American Economic Review VOL. 89 NO. 1 *Antras and Staiger (2011) Offshoring and the Role of Trade Agreements, AER Bagwell, K. and R. W. Staiger, 2001, Domestic Policies, National Sovereignty and International Economic Institutions, Quarterly Journal of Economics, 116:2, 519-562. Grossman, G. and E. Helpman, Trade Wars and Trade Talks, JPE (August 1995). Broda, C., Limao, N. and D. Weinstein, Optimal Tariffs and Market Power: The Evidence, AER, (December 2008). Bagwell, K. and R.W. Staiger, Backward Stealing and Forward Manipulation in the WTO, JIE (September 2010). Maggi, G. and A. Rodriguez-Clare, 1998, The Value of Trade Agreements in Presence of Political Pressures, Journal of Political Economy, 106:3, 574-601. Maggi, G. and A. Rodriguez-Clare, 2007, A Political-Economy Theory of Trade Agreements, American Economic Review, 97:4, 1374-1406. Maggi, G. and R.W. Staiger, The Role of Dispute Settlement Procedures in International Trade Agreements, QJE (forthcoming). Ossa, R., A New Trade Theory of GATT/WTO Negotiations, mimeo (Feb. 2009). 5