International trade

Warning: this course was last taught in 2009/2010. It is now being taught by Agnès Bénassy-Quéré and Isabelle Méjean [].

The first part of the course covers international trade and economic geography: stylized facts on globalization, past and present, trade based on comparative advantages (Ricardo) and on factor endowment (Hecksher-Ohlin-Samuelson), Stolper-Samuelson and Rybczynski theorems, trade based on imperfect competition (Krugman) and with heterogeneous firms (Melitz), trade policy instruments, location choices (Hotelling, Core-Periphery models).

These theoretical tools help understand the welfare impact of globalization and current discussions on trade policy.

Textbooks

  • Paul Krugman and Maurice Obstfeld, International Economics: Theory and Policy, Addison Wesley, 2009
  • Thierry Mayer et Jean-Louis Mucchielli, Economie internationale, éd. Dalloz, 2005 (in French)
  • Pierre-Philippe Combes, Thierry Mayer and Jacques-François Thisse, Economic Geography, Princeton University Press, 2008, in French: Economie géographique, éd. Economica, 2006
  • Richard Baldwin, Rikard Forslid, Philippe Martin, Gianmarco Ottaviano and Fréderic Robert-Nicoud, Economic Geography and Public Policy, Princeton University Press, 2005

Download the 2010 reading list

 

Lesson #1: Globalization and comparative advantage

Overview:

  • Stylized facts on globalization
  • International trade
  • Comparative advantage and gain from trade. Ricardo's model

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Lesson #2: The neo-classical model of international trade

Overview:

  • Factor endowment and specialization: Hecksher-Ohlin-Samuelson
  • Openness and factor prices: Stolper-Samuelson theorem
  • Shocks to factor endowment: Rybczynski theorem
  • The 'Leontieff paradox'

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Lesson #3 : International trade under imperfect competition

Overview:

  • Intra-industry trade
  • Trade under monopolistic competition (Krugman, 1980)
  • Trade with heterogeneous firms (Mélitz, 2003)

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Lesson #4: Trade policies

Overview:

  • Trade policy instruments
  • Welfare consequences of tariffs; optimal tariff
  • Multilateral trade agreements and regional trade agreements
  • The political economy of protection

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Lesson #5: Economic geography

Overview:

  • Spatial competition (Hotelling, 1929)
  • New economic geography: driving forces and the 'Core-Periphery' model (Krugman, 1991)
  • Regional policies
  • Multinational firms, horizontal and vertical FDI

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