Economics | International Trade
E331 | 1700 | Prof. Raff


E331: INTERNATIONAL TRADE


Prof. Horst Raff        Spring 2000
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.




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%.