ITRN/GCP 504: Microeconomics and Trade Policy
ITRN 504:DL1, asynchronous, 3.00 Credits
Revised: January 13, 2023
Kenneth A. Reinert
Phone: 703-993-8212
Email: kreinert@gmu.edu (best way to get in touch with me)
Office: Van Metre Hall, Room 627
Office hours: Upon email request via Blackboard Collaborate Ultra
Home page: reinert.gmu.edu
Course Description
This course provides an introduction to microeconomics and international trade for the International Commerce and Policy student. In the first part of the course, our main objective is to understand the basic principles of the market system underlying local, national, and international economies. Here we will assess both the desirable properties and the limitations of the market system, as well as the appropriate potential roles of government. In the second part of the course, our main objective is to understand the forces behind international trade. Here we will assess the main causes of international trade, their effects, the analysis of trade policies, and the institutions of international trade.
For the Spring 2023 semester, this course is offered as an asynchronous, online course, on the Mason Blackboard platform.
Learning Outcomes
Knowledge and Understanding
Students will understand the basic concepts and terms of microeconomics as they apply to policy analysis.
Students will understand the causes of international trade and the political economy of trade.
Analytical Skills and Abilities
Students will be able to use the supply and demand model for policy analysis, including trade policy analysis, and to calculate elasticities.
Professional Development
Students will be conversant with the basic terms of economic trade policy analysis as used in the profession.
Required Books
Reinert, K.A. (2021) Marshall’s Blackberries: A Short Introduction to Microeconomics. Free on Blackboard! Note: This textbook is a work in progress and will be updated periodically on Blackboard during the semester.
Reinert, K.A. (2021) An Introduction to International Economics: New Perspectives on the World Economy, Cambridge University Press. The most accessible and inexpensive textbook in international economics on the planet!
Course Requirements and Grading
Midterm exam- 30 percent
Cumulative final exam- 30 percent
Problem sets- 25 percent
Class participation- 15 percent
Course Outline and Readings
Week 1 (January 23-January 29): Introduction to Class
Read Marshall’s Blackberries, Chapter 1, “Marshall’s Blackberries.”
Read Introduction to International Economics, Chapter 1, “Introduction.” (Power Point here)
Review the Welcome to the Course video on Blackboard.
Introduce yourself on the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Recommended:
K.A. Reinert (2017) “Globalisation(s) and Development,” Edward Elgar blog, March 22.
Week 2 (January 30-February 5): Tools of Analysis
Read Marshall’s Blackberries, Chapter 2, “Tools of Analysis.”
Begin Problem Set 1 on Blackboard. See the Getting Started with Problem Set 1 whiteboard presentation.
Review the following whiteboard presentations: Linear and Nonlinear Graphs, Resource Constraint, Total, Averages and Marginals, and Production Possibilities Frontier.
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Week 3 (February 6-February 12): The Supply and Demand Model
Read Marshall’s Blackberries, Chapter 3, “The Supply and Demand Model.”
Begin Problem Set 2 on Blackboard.
Review the following whiteboard presentations: Market Equilibrium and Shifts in Demand and Supply Curves.
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Week 4 (February 13-February 19): Elasticities
Read Marshall’s Blackberries, Chapter 4, “Elasticities.” Feel free to skip appendix.
Problem Set 1 due.
Review the following whiteboard presentations: Stacked Fractions in Elasticity Formulas and Price Elasticity of Demand and the Linear Demand Curve.
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Week 5 (February 20-February 26): Allocative Efficiency and Taxes
Read Marshall’s Blackberries, Chapter 5, “Allocative Efficiency and Taxes.”
Problem Set 2 due.
Review the following whiteboard presentations: Consumer and Producer Surplus, Changes in Consumer and Producer Surplus, and Allocative Efficiency,
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Recommended:
Marshall, A. (1893) “Consumer’s Surplus,” Annals of the American Academy of Political and Social Science, 3, 90-93.
Week 6 (February 27-March 5): The Theory of the Firm
Read Marshall’s Blackberries, Chapter 6, “The Costs of Production.”
Begin Problem Set 3 on Blackboard.
Review the following whiteboard presentations: Average and Marginal Product of Labor, Total Product of Labor and Total Cost Curve.
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Recommended:
Brue, S.L. (1993) “The Law of Diminishing Returns,” Journal of Economic Perspectives, 7:3, 185-192.
Week 7 (March 6-March 12): The Theory of the Firm Continued
Read Marshall’s Blackberries, Chapter 7, “Firm Supply.”
Continue Problem Set 3.
View the following whiteboard presentations: Profit Maximization with AVC, ATC and MC Curves
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Recommended:
Hughes, P. (2006) “The Economics of Nonprofit Organizations,” Nonprofit Management and Leadership, 16:4, 429-450.
Kogut, B. and U. Zander (1996) “What Do Firms Do? Coordination, Identity, and Learning,” Organization Science, 7:5, 502-518.
Week 8 (March 13-March 19): Spring Break
Week 9 (March 20-March 26): Midterm Exam
See study guide link at top of page.
Problem Set 3 due.
The midterm exam will be posted on Blackboard on Monday March 21th by 9:00 AM. It is due on Friday March 25th by midnight with scanned images.
Week 10 (March 27-April 2): Market Failure (Monopoly, Externalities, Public Goods)
Read Marshall’s Blackberries, Chapter 8, “Market Limitations.”
View Whiteboard recording posted on Blackboard on the monopoly model diagram.
Begin Problem Set 4.
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Recommended:
Bauman, Y. and S.-L. Hsu (2012) “The Most Sensible Tax of All,” New York Times, July 4.
The Economist (2017) “Externalities: Pigouvian Taxes,” August 19.
Mankiw, N.G. (2007) “One Answer to Global Warming: A New Tax,” New York Times, September 16.
Week 11 (April 3-April 9): International Trade
Read Introduction to International Economics, Chapter 2, “Absolute Advantage” and Chapter 3, “Ricardian Model of Comparative Advantage.” (Power Points here)
View the following whiteboard presentations: Absolute Advantage and the Ricardian Model.
Problem Set 4 is due. Begin Problem Set 5.
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Week 12 (April 10-April 16): International Trade Continued
Read Introduction to International Economics, Chapter 4, “Heckscher-Ohlin Model of Comparative Advantage” and Chapter 5, “Intra-Industry Trade.” (Power Points here)
View the following whiteboard presentation: Heckscher-Ohlin Model.
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Week 13 (April 17-April 23): Political Economy of Trade and Trade Policy
Read Introduction to International Economics, Chapter 6, “The Political Economy of Trade” and Chapter 7, “Trade Policy Analysis.” (Power Points here)
View the following whiteboard presentations: Tariff Diagram and Quota Diagram.
Problem Set 5 due. Begin Problem Set 6.
On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.
Recommended:
González, A. (2020) “A Memo to Trade Ministers on How Trade Policy Can Help Fight COVID-19,” Trade Policy Watch, Peterson Institute for International Economics.
The Economist (2017) “Politicians Cannot Bring Back Old-Fashioned Factory Jobs,” January 14.
Week 14 (April 24-April 30): The WTO and Preferential Trade Agreements
Read Introduction to International Economics, Chapter 8,”The World Trade Organization,” and Chapter 9, “Preferential Trade Agreements.” (Power Points here)
Recommended:
The Economist (2008) “Regional Trade Agreements: A Second-Best Choice,” September 4.
Laïdi, Z. (2013) “Trade Deals Show Power Politics Is Back,” Financial Times, March 31.
Week 15 (May 1-May 7): Review of Semester
Problem Set 6 is due.
Please send me questions you have for the whole semester for review. As best as I can, I will post answers on Blackboard in the form of whiteboard recordings.
Week 16 (May 8-May 14): Cumulative Final Exam, Online
See study guide link at top of page.
The final exam will be posted on Blackboard on Monday May 8th by 9:00 AM. It is due on Friday May 12th by midnight with scanned images.
Other Useful Books
Baldwin, R. (2016) The Great Convergence: Information Technology and the New Globalization, Harvard Univesity Press. Just what the title says!
Evenett, S. (2017) Cloth for Wine? The Relevance of Ricardo’s Comparative Advantage in the 21st Century, Vox. A contemporary look at Ricardo’s principle of comparative advantage by some leading trade economists.
Goldin, I. and K.A. Reinert (2012) Globalization for Development: Meeting New Challenges, Oxford University Press. A review of multiple dimensions of globalization and their relationships to development.
Findlay, R. and K.H. O’Rourke (2007) Power and Plenty: Trade, War, and the World Economy in the second Millennium, Princeton University Press. An extraordinary history of world trade going back to ancient times.
Hoekman, B.M. and M.M. Kostecki (2009) The Political Economy of the World Trading System, Oxford University Press, Oxford. A must-have introduction to the WTO for trade policy analysts.
Levinson, M. (2006) The Box, Princeton University Press. A business history of container shipping and its impacts on the world trading system.
Lindblom, C.E. (2001) The Market System, Yale University Press. A review of market systems from a noted political scientist.
Reinert, K.A. (ed.) (2017) Handbook of Globalisation and Development, Edward Elgar. A comprehensive collection of chapters on all aspects of globalization and their relationship to development.
Reinert, K.A. and R.S. Rajan (eds.) (2009) The Princeton Encyclopedia of the World Economy, Princeton University Press. A useful reference on all aspects of international economics. Available in the Arlington library and in electronic form through the library catalog.
Tirole, J. (2017) Economics for the Common Good, Princeton University Press. An insightful book on all aspects of microeconomics from a Nobel Laureate.
Walter, A. and G. Sen (2009) Analyzing the Global Political Economy, Princeton University Press. A very good introduction to the theory of global political economy.
Useful Podcast
Some Policies
No texting in class unless in an emergency.
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, physical ability, or citizenship status.
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.