Course ObjectivesPrerequisitesReadingsProblem SetsAssessmentClass ScheduleEconomics 101 — Spring 2005International TradeMay 24, 2005Instructor: Marc-Andreas MuendlerOffice: Economics 312Office hours: Tue 11:15am - 12:15pm, Wed 9:30am - 10:30amPhone: (858) 534-4799E-mail: [email protected]: Peterson Hall, room 110Class Time: TuTh 9:30am-10:50amClass Web Page: econ.ucsd.edu/muendler/teach/05s/101Section ID 528605Teaching Assistants: Michael Ewens Lindsay OldenskiE-mail: [email protected] [email protected]: SH 139 Econ 114Office hours: Fri 9:00am-11:00am TueThu 11:00am-12:00pmTeaching Assistants: Jennifer Poole Qun XuE-mail: [email protected] [email protected]: Econ 120 SH 237Office hours: MonWed 11:00a-12:00p Fri 9:00a-11:00a1 Course ObjectivesThis course examines theories of international trade in goods and services, aswell as international flows of labor and capital, and analyzes trade policies.The course presents the principle of comparative advantage and its applica-tion to classical and modern trade theory. Focusing on the long-term effects ofinternational economic integration, the course discusses the motives for tradepolicies and presents the economic effects of trade barriers and trading blocson industrial competitiveness, income distribution and welfare.2 PrerequisitesEconomics 1A-B-C. Recommended: Economics 100A-B or 170A-B.3 ReadingsRequired textbook: Krugman and Obstfeld (2003)1Required readings: Feenstra (1998),Leamer and Levinsohn (1995);Mussa (1993); Horlick and Palmer (2001);Grossman and Helpman (1995); Rodrik (1992), Freeman (1995);Rodrik (1998), Williamson (1998)The readings (articles) help you review the lecture material beyond the text-book. They are available through the class web page (see link above). Web linksto copyrighted readings only work from on-campus domains.4 Problem SetsThere will be three problem sets, due on scheduled dates throughout the quar-ter. You are encouraged to work on the problems with your classmates. Yourteaching assistants Michael Ewens, Lindsay Oldenski, Jennifer Poole and QunXu will hold sections over the course of the quarter to help you approach theproblems. Your solutions to the problem sets will be checked (check/no check)and your performance on them will be a part of the final grade. Problem setshave to be handed in before 9:30am on the due date. You may bring them toclass before it starts.Problem sets 1 through 3 will contain five exam-like but more elaboratequestions, each counting three points. Problem set 3 will have one open ques-tion in addition, counting five points.5 AssessmentThere will be two midterm exams and a final exam. The two midterm examswill take 80 minutes each and the final exam will take 120 minutes. All examsare cumulative.Your final raw score will be your total points from the three exams and thethree problem sets:Problem sets: 50 points (15+15+20 points) 4/14, 5/5, 5/31Midterm 1 (80 minutes): 80 points 4/21Midterm 2 (80 minutes): 80 points 5/12Final (120 minutes): 120 points 6/9Total: 330 pointsMidterm exams last for the time of a lecture. (Problem sets have to be handedin before 9:30am on the due date.) The final exam lasts 120 minutes.Your final letter grade will be inferred from the typical grade distribution(curve) in economics classes at UCSD. You can find this grade distribution atecon.ucsd.edu/muendler/teach/05s/101. So, the difficulty or simplicity of problemsets and exams will not matter, whereas your relative performance in compar-ison to your classmates will determine your final letter grade.We will offer review sessions to prepare you for the exams.26 Class ScheduleI. Classic Trade Theory1. Tue, March 29: Introduction to International Trade(Krugman and Obstfeld 2003/Ch. 1)2. Thu, March 31: Comparative Advantage due to Productivity Differences(Krugman and Obstfeld 2003/Ch. 2)PROBLEM SET 1 OUT3. Tue, April 5: Multiple Goods and Specific Factors of Production(Krugman and Obstfeld 2003/Ch. 2)4. Thu, April 7: Comparative Advantage due to Endowment Differences(Krugman and Obstfeld 2003/Ch. 3)5. Tue, April 12: Mobile Factors and the Pattern of Trade(Krugman and Obstfeld 2003/Ch. 4)6. Thu, April 14: Implications for the Political Economy of Trade(Krugman and Obstfeld 2003/Ch. 3&4)PROBLEM SET 1 DUE7. Tue, April 19: The Standard Trade Model, the Terms of Trade, and Tariffs(Krugman and Obstfeld 2003/Ch. 5)Thu, April 21: MIDTERM 1covering lectures 1 through 7 and Krugman and Obstfeld (2003)/Ch. 1through 5II. Imperfect Competition and Trade Theory8. Tue, April 26: Exogenous Economic Growth and Imperfect Competition(Krugman and Obstfeld 2003/Ch. 5&6)PROBLEM SET 2 OUT9. Thu, April 28: Intra-industry Trade(Krugman and Obstfeld 2003/Ch. 6)10. Thu, May 3: International Integration of Production(Krugman and Obstfeld 2003/Ch. 7 and Feenstra 1998)PROBLEM SET 2 DUE11. Tue, May 5: Market Segmentation and Trade under External Economies ofScale(Krugman and Obstfeld 2003/Ch. 6)12. Tue, May 10: Theories of Trade: The Evidence(Leamer and Levinsohn 1995)3Thu, May 12: MIDTERM 2covering lectures 1 through 12, Krugman and Obstfeld (2003)/Ch. 1through 6, Leamer and Levinsohn (1995) and Feenstra (1998)III. Trade Policy13. Tue, May 17: Instruments of Trade Policy(Krugman and Obstfeld 2003/Ch. 8)PROBLEM SET 3 OUT14. Thu, May 19: Costs and Benefits of Tariffs and Other Trade Restrictions(Krugman and Obstfeld 2003/Ch. 5&8))15. Tue, May 24: Trade Agreements(Krugman and Obstfeld 2003/Ch. 9), Mussa 1993, and Horlick and Palmer2001)16. Thu, May 26: Aspects of Trade and Growth(Krugman and Obstfeld 2003/Ch. 6&10, and Grossman and Helpman1995)17. Tue, May 31: Political Economy of Trade Policies(Krugman and Obstfeld 2003/Ch. 6&10, Rodrik 1992, and Freeman 1995)PROBLEM SET 3 DUE18. Thu, June 2: Economic Integration: Past and Present(Rodrik 1998 and Williamson 1998)Thu, June 9 (Finals Week): 8:00am to 10:00am FINAL EXAMcovering lectures 1 through 18, Krugman and Obstfeld (2003)/Ch. 1through 10;Feenstra (1998), Freeman (1995); Grossman and Helpman (1995), Horlickand Palmer (2001), Leamer and Levinsohn (1995), Mussa (1993), Rodrik(1992), Rodrik (1998), and Williamson (1998)ReferencesFEENSTRA, R. C. (1998): “Integration of Trade and Disintegration of Production in theGlobal Economy,” Journal of Economic Perspectives, 12(4), 31–50.FREEMAN, R. B. (1995): “Are Your Wages Set in Beijing?,” Journal of Economic Perspec-tives, 9(3), 15–32.GROSSMAN, G. M., AND E. HELPMAN (1995): “Technology and Trade,” in