Lecture Notes in International Trade Theory

Lecture Notes in International Trade Theory covers classical international trade models (including the Ricardian, Ricardo Viner, and Heckscher-Ohlin-Samuelson models). The course is designed for M.Sc. and first year PhD students. It relies on both graphical and analytic methods, requiring only intermediate microeconomics and a solid grounding in calculus. The material emphasizes 'second-best' settings, where markets are imperfect. The goal is to equip students with a good enough understanding of open-economy general equilibrium relations that they understand how distortions ripple across different markets, e.g. commodity and factor markets. The Author applies these ideas to environmental and natural resource problems, including pollution 'leakage' (where pollution reductions in one country are offset by trading partners' increased pollution) and imperfect property rights. Other applications include the general equilibrium effects of commodity and trade taxes, international transfers (the 'transfer problem'), minimum wage constraints, and immiserizing growth. The Author assumes that students have some experience in formulating and answering comparative statics questions in an optimization setting. Building on these skills, and developing the idea of stability in an equilibrium setting (the Marshall Lerner condition), students learn how to formulate and answer comparative static questions in trade models.

Contents:

• Preface

• About the Author

• About the Book

• Introduction

• Ricardian Model

• Comparative Statics: Taxes and Stability

• Applications: Empirics, Transfers, and Leakage

• The Theory of the Second Best

• The RicardoViner Model

• The HeckscherOhlinSamuelson Model

• Appendices:

  • Derivation of Equation (4.11)
  • Problem Sets
  • Answer Key

• Index

Readership: MSc and first year PhD students in economics and applied economics. It is suitable for an applied microeconomics graduate course providing a emphasizing open economy general equilibrium, or as a supplement or introduction for a PhD course in international trade.
Key Features:

• These lecture notes provide a middle ground between an undergraduate and an advanced PhD course in international trade
• The lectures can be used as preparation for or a supplement to a PhD course in international trade, but the Author designed them as a stand-alone course where most students would likely not continue to a graduate course in trade
• Helps develop students' ability to use tractable (but often not simple) models to think about complicated real-world problems, mostly in a general equilibrium open economy setting
• Helps develop understanding of "second best" economies (those with more than one distortion or market failure), and also to introduce them to trade topics related to natural resources
• The notes include problem sets and answer keys

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