Economics | International Trade
E331 | 1732 | Raff


Economics ,  International Trade
E331 ,  1732 ,  Raff

E331: INTERNATIONAL TRADE

Prof. Horst Raff        Fall 1999
Office: Wylie Hall 207
Tel: 855-7928
E-mail: HRAFF@INDIANA.EDU

About the Course:

This course has two objectives: (1) to introduce the basic concepts
and tools of modern international trade theory; (2) to examine
important issues in commercial policy, international economic
integration, and foreign investment. Roughly equal time will be
allocated to each of these two topics. Several classes will be devoted
to a discussion of current issues in international trade such as the
North-American Free Trade Agreement and the U.S. trade deficit.

The first half of the course is devoted to the positive theory of
international trade: why do countries trade? What are the competing
theories that explain the composition of trade between various groups
of countries? How does trade affect income distribution within a
country? What happens to wages if a country enters into free trade
with another country? How does trade affect employment and capital
investment in different sectors of the economy? Why do countries run
trade deficits or surpluses and what are their consequences?

In the second half, we will analyze the effects of trade policies,
such as tariffs, quotas, voluntary export restraints, on output,
employment and social welfare; and we ask the following questions: are
tariffs beneficial for a nation's growth and welfare? How do tariffs
differ from other forms of protection? What are the consequences of
various types of regional and global economic integration such as
NAFTA and the Uruguay Round of the GATT? How does the U.S. set its
commercial policy and what influence do interest groups have on this
process?

Prerequisites:

 E321, Intermediate Microeconomics.
 Facility with calculus.



Reading Assignments:

There is a required text: Paul Krugman and Maurice Obstfeld,
International Economics, 4th ed., Addison Wesley 1997.

Materials will also be drawn from other sources from time to time and
readings will be distributed in class if necessary. Students will be
responsible for all issues covered in class and all reading
assignments whether or not they are covered in class.

Exams and Grading:

Grading will be based on three exams and several assignments. The
first exam (worth 25%) will cover international trade theory, the
second (worth 25%) will cover commercial policy and the final exam
(worth 25%) will be comprehensive in theory and policy. Exams will
generally consist of a combination of analytical problems, essay
questions, and true and false questions. The assignments will account
for the remaining 25%.