ITRN 791 Trade Policy

ITRN 791 Advanced Trade Policy Analysis

Revised: April 8, 2013.

Kenneth A. Reinert

Phone: 703-993-8212
Email: kreinert@gmu.edu
Office: Founders Hall, 627
Office hours: Tuesday, 6-7 PM and by appointment.

Course Description

This course introduces the student to both international trade theory and trade policy analysis. It is intensive in graphical analysis. SPP students should not take this course unless they have either done well in ITRN 504 of have taken PUBP 720. Students from other programs are welcome to take the course if they have completed the equivalent of intermediate microeconomics.

Learning Outcomes

Knowledge and Understanding: This course introduces the student to a more advanced treatment of trade theory than does ITRN 504 and emphasized how this theory helps us understand the reasons for and processes of international trade in goods and services.

Analytic Skills and Abilities: The course develops general equilibrium reasoning in microeconomics as shows how this reasoning can be applied to understanding the political economy of trade and trade policy analysis.

Professional Development and Leadership: The course further introduces the student to the lexicon of trade policy analysis, better preparing the student for potential employment in this field.

Main Texts

Feenstra, R.C. and A. M. Taylor (2011) International Trade, Worth Publishers. We will probably accesss this book via www. aplia.com.

Markusen, J.R., J.R. Melvin, W.H. Kaempfer, and K.E. Maskus (1995) International Trade: Theory and Evidence, McGraw-Hill. Note: this excellent text is out of print. You can access it via Jim Markusen’s web-site. Important for Ph.D. students.

Aplia

Your access to the Feenstra textbook, along with problem sets, will be via Aplia. 1. Connect to http://www.aplia.com/. 2. If you already have an account, sign in. Go to your My Courses page, and click the Enroll in a New Coursebutton. 3. If you don’t have an account, click the Create a New Account button, and choose Student Account. 4. Enter your Course Key when prompted: BE3C-UMQV-VL3F. Continue to follow the on-screen instructions to access your course.

Other Useful Books

Bhagwati, J., A. Panagariya, and T.N. Srinivasan (1998) Lectures on International Trade, MIT Press.

Feenstra, R.C. (2004) Advanced International Trade: Theory and Evidence, Princeton University Press.

Francois, J.F. and K.A. Reinert (eds.) (1997) Applied Methods for Trade Policy Analysis: A Handbook, Cambridge University Press.

Helpman, E. and P.R. Krugman (1989) Trade Policy and Market Structure, MIT Press.

Hertel, T.W. (ed.) (1997) Global Trade Analysis: Modeling and Applications, Cambridge, University Press.

Hoekman, B. and M. Kostecki (2009)The Political Economy of the World Trading System, Oxford University Press.

Reinert, K.A. (2012) An Introduction to International Economics, Cambridge University Press.

van Marrewijk, C. (2002) International Trade and the World Economy, Oxford University Press.

Vousden, N. (1990) The Economics of Trade Protection, Cambridge University Press.

World Bank (undated) A Guide to Trade Data Analysis.

Course Requirements and Grading

Problem Sets- 20 percent
Midterm exam- 30 percent
Final exam- 30 percent
Class participation- 20 percent

Course Outline and Readings

Weeks 1 and 2: Introduction and Microeconomics of Closed and Open Economies (23 January, 30 January)

Feentra and Taylor, Chapter 1.

Ph.D. Students: Markusen et al., Chapters 2, 3, 4, 5, and 6.

Aplia Graded Problem Set: “Introduction to Using Aplia Assignments,” Due Sunday February 3, 11:45 PM.

Recommended:

Humphrey, T.M. (1996) “The Early History of the Box Diagram,” Federal Reserve Bank of Richmond Economic Quarterly, 82:1, 1996, 37-75.

Maneschi, A. (2009) “Comparative Advantage,” in K.A. Reinert, R.S. Rajan, A.J. Glass and L.S. Davis (eds.), Princeton Encyclopedia of the World Economy, Princeton University Press, 198-205.

Week 3: Ricardian Model (6 February)

Feenstra and Taylor, Chapter 2.

Ph.D. students: Markusen et al., Chapter 7. Ph.D. students.

Aplia Graded Problem Set: “Trade and Technology, The Ricardian Model,” Due Sunday February 10, 11:45 PM.

Recommended:

Bhagwati, Panagariya, and Srinivasan, Chapters 2 through 4.

Deardorff, A. (2009) “Ricardian Model,” in K.A. Reinert, R.S. Rajan, A.J. Glass and L.S. Davis (eds.), Princeton Encyclopedia of the World Economy, Princeton University Press, 973-980.

Grossman, G.M. and E. Helpman (1995) “Technology and Trade,” in G. Grossman and K. Rogoff (eds.), Handbook of International Economics, Volume III, Elsevier, Amsterdam, 1279-1337.

Ruffin, R.J. (2002) “David Ricardo’s Discovery of Comparative Advantage,” History of Political Economy, 34:4, 727-748.

Stern, R.M. (1962) “British and American Productivity and Comparative Costs in International Trade,” Oxford Economic Papers, 14:3, 275-296.

Week 4: Heckscher-Ohlin Model (13 February)

Feenstra and Taylor, Chapter 4.

Ph.D. students: Markusen et al., Chapter 8.

Aplia Graded Problem Set: “Trade and Resources, The  Heckscher-Ohlin Model,” Due Sunday February 17, 11:45 PM.

Recommended:

Bhagwati, Panagariya, and Srinivasan, Chapters 5, 6, and 8.

Panagariya, A. (2009) “Heckscher-Ohlin Model,” in K.A. Reinert, R.S. Rajan, A.J. Glass and L.S. Davis (eds.), Princeton Encyclopedia of the World Economy, Princeton University Press, 591-597.

Reinert, K.A. and K.W. Roland-Holst (1998) “North-South Trade and Occupational Wages:  Some Evidence from North America,” Review of International Economics, 6:1, 74-89.

Stolper, W. and P.A. Samuelson (1941) “Protection and Real Wages,” Review of Economic Studies, 9:3, 58-73.

Trefler, D. (1995) “The Case of Missing Trade and Other Mysteries,” American Economic Review, 85:5, 1029-1046.

Week 5: Specific Factors Model (20 February)

Feenstra and Taylor, Chapter 3.

Ph.D. students: Markusen et al., Chapter 9.

Aplia Graded Problem Set: “Gains and Losses from Trade in the Specific Factors Model,” Due Sunday February 24, 11:45 PM.

Recommended:

Bhagwati, Panagariya, and Srinivasan, Chapter 7.

Jones, R.W. (2009) “Specific-Factors Model,” in K.A. Reinert, R.S. Rajan, A.J. Glass and L.S. Davis (eds.), Princeton Encyclopedia of the World Economy, Princeton University Press, 1021-1026.

Jones, R.W. (1971) “A Three-Factor Model in Theory, Trade, and History,” in J.N. Bhagwati et al., Trade, Balance of Payments and Growth, North Holland, 3-21.

Neary, J.P. (1978) “Short-Run Capital Specificity and the Pure Theory of International Trade,” Economic Journal, 88:351, 488-510.

Week 6: Movements of Labor and Capital (27 February)

Feenstra and Taylor, Chapter 5.

Ph.D. students: Markusen et al., Chapters 21 and 22.

Aplia Graded Problem Set: “Movement of Labor and Capital between Countries,” Due Sunday March 3, 11:45 PM.

Recommended:

Mundell, R.A. (1957) “International Trade and Factor Mobility,” American Economic Review, 47:3, 321-335.

Purvis, D.D. (1972) “Technology, Trade and Factor Mobility,” Economic Journal, 82:327, 991-999.

Reinert, Chapters 9, 10 and 11.

Week 7: Snowquester: Class Cancelled

Week 8: Spring Break (13 March)

Week 9: Midterm Exam (20 March)

Week 10: New Trade Theory: Increasing Returns to Scale and Imperfect Competition (27 March)

Feenstra and Taylor, Chapter 6.

Ph.D. students: Markusen et al., Chapters 11 and 12.

Aplia Graded Problem Set: “Increasing Returns to Scale and Monopolistic Competition,” Due Sunday March 31, 11:45 PM.

Recommended:

Bhagwati, Panagariya, and Srinivasan, Chapters 11 and 30.

Krugman, P. (1980) “Scale Economies, Product Differentiation, and the Pattern of Trade,” American Economic Review, 70:5, 950-959.

Matschke, X. (2009) “New Trade Theory,” in K.A. Reinert, R.S. Rajan, A.J. Glass and L.S. Davis (eds.), Princeton Encyclopedia of the World Economy, Princeton University Press, 829-833.

Ruffin, R.J., “The Nature and Significance of Intra-Industry Trade,” Federal Reserve Bank of Dallas Economic and Financial Review, 1999.

Week 11:  Revealed Comparative Advantage, Gravity Models and Applied General Equilibrium Analysis (3 April)

Feentra and Taylor, Chapter 6.

Recommended:

Belassa, B. (1965) “Trade Liberalization and ‘Revealed’ Comparative Advantage,” Manchester School of Economic and Social Studies, 33:2, 92-123.

Reinert, K.A. (2009) “Applied General Equilibrium Models,” K.A. Reinert, R.S. Rajan, A.J. Glass and L.S. Davis (eds.), Princeton Encyclopedia of the World Economy, Princeton University Press, 74-78.

Reinert, K.A. (2009) “Gravity Models,” K.A. Reinert, R.S. Rajan, A.J. Glass and L.S. Davis (eds.), Princeton Encyclopedia of the World Economy, Princeton University Press, 567-570.

Rodrigo, G.C. (2009) “Revealed Comparative Advantage,” in K.A. Reinert, R.S. Rajan, A.J. Glass and L.S. Davis (eds.), Princeton Encyclopedia of the World Economy, Princeton University Press, 971-973.

Weeks 12 and 13: Trade Policy Analysis (10 and 17 April)

Feenstra and Taylor, Chapters 8, 9 and 10.

Ph.D. Students: Markusen et al., Chapters 15 and 16.

Gopalan, S., A.A. Malik and K.A. Reinert (2012) “The Imperfect Substitutes Model in South Asia: Pakistan-India Trade Liberalization in the Negative List,” Center for Emerging Market Policies, School of Public Policy, George Mason University.

Aplia Graded Problem Sets: “Import Tariffs and Quotas under Perfect Competition,” Due Sunday April 21, 11:45 PM.

Recommended:

Francois, J.F. and Hall, H.K. (1997) “Partial Equilibrium Modeling,” in J.F. Francois and K.A. Reinert (eds.) Applied Methods for Trade Policy Analysis: A Handbook, Cambridge:University Press, 122-155. 

Francois, J.F. and Reinert, K.A. (2009) “Partial Equilibrium Models,” in K.A. Reinert, R.S. Rajan, A.J. Glass and L.S. Davis (eds.) The Princeton Encyclopedia of the World Economy, Princeton University Press, 891-894. 

Rouslang, D.J. and Suomela, J.W. (1988) “Calculating the Welfare Costs of Import Restrictions in the Imperfect Substitutes Model,” Applied Economics 20:5, 691-700.

Week 14: Brown Bag Panel Discussion (24 April) 12:00-1:30 PM (Revised Midterms Due)

Robert Koopman, Director of Operations, U.S. International Trade Commission.

Joe Flynn, Director, Office of Competition and Economic Analysis, International Trade Administration, U.S. Department of Commerce.

Mary Burfisher, Economic Consultant, Economic Research Service, U.S. Department of Agriculture.

Week 15:  Review of Semester (1 May)

Week 16: Final Exam (8 May)

Relevant Journals

International Journal of Trade and Global Markets

International Trade Journal

Journal of Industry, Competition and Trade

Journal of International Economics

Journal of International Trade and Economic Development

Journal of World Trade

Review of International Economics

World Trade Review

Some Policies

No texting in class.

Exams are not “open book” or “open notes.”

There is no “extra work” that can be done for “extra credit.”

Students are responsible for obtaining notes from other class members if they miss a class.

The GMU honor code will be enforced. To be more specific: If I can show that a student cheated on an exam, that student will fail the course.

It is my personal policy not to discriminate among students based on race, ethnicity, religious faith, national origin, gender, sexual orientation, or physical ability (see below).

Academic Accommodation for a Disability

If you are a student with a disability and you need academic accommodations, please see me and contact the Disability Resource Center (DRC) at 703-993-2474.  All academic accommodations must be arranged through the DRC.