INTB 334: INTERNATIONAL TRADE3 The Classical Trade Model4 The Heckscher- Ohlin Trade Model11 The Balance of Payments (tentative)INTB 334: INTERNATIONAL TRADE Textbook: International Economics, Husted and Melvin, Addison Wesley LongmanInstructor: Dr. Shawkat HammoudehOffice: Pearlstein near Starbucks coffeeOffice Hours To be determined in class and by appointmentTelephone: (215) 895-6673 (voice mail is available). Email is preferred.E-mail: [email protected]; [email protected]. (preferred) TA E-mail: [email protected] (Soodabeh Sarafrazi)Website http://faculty.lebow.drexel.edu/hammoudehs/intb_334.htmBlog: blogs.zawya.com/shawkat.hammoudehFax: (215) 895-6975Objectives: An understanding ofBasic theories of international tradeSocial impacts of commercial policiesForeign exchange marketsGrading: Mid term 40% (5th week)Final exam 45%Homework 10% (penalty on late submissions!)Participation 5%Grading ScaleLetter grades for the course will be determined as follows:A+ 95 - 100%A 90 - < 95%A- 88 - <90%B+ 86 - <88%B 80 - < 86%B- 78 - <80%C+ 76- < 78%C 70-76%C- 68- < 70%D < 68%Academic Honesty- In order to protect and maintain a superior learning environment at LeBow College ofBusiness, all students must review and adhere to Drexel University’s AcademicHonesty Policy. For details, see:http://www.drexel.edu/studentlife/studenthandbook/Handbook.html (see Code ofConduct under Judicial Affairs)- Forms of academic dishonesty include plagiarism, fabrication, cheating, and academicmisconduct. Students are responsible for the authenticity of material submitted both forindividual and group work.The Hagerty Library offers a brief online tutorial for recognizing and avoiding plagiarism at: http://www.library.drexel.edu/resources/tutorials/plagiarism/plagiarism.htmlAny violation of the University conduct will be reported and those involved may receive an F in the course.Reading schedule: (Tentative)Chapter Description1 & 2 Introduction Tools of analysis for Int’l Trade Models 3 The Classical Trade Model Absolute and Comparative AdvantageHW # 1 (problems 1 & 2 in HW file)4 The Heckscher- Ohlin Trade Model Characteristics of countries and products(HW # 2 Case 1 and exercise 6 at end of chapter 3 in the textbook).5 Tests and Alternative Theories of Comparative Adv. MacDougall’s TestLeontief’s TestIntra-industry TradeIncreasing Returns(HW # 3)Midterm6 Commercial Policies Tariffs (HW #4)7 & 8 Nontariff Barriers & Protection Quotas, subsidies and dumpinghttp://news.bbc.co.uk/1/hi/business/4747186.stm(HW # 5)Commercial Policy: History & Practice 9 Preferential Trade Arrangements (tentative) 11 The Balance of Payments (tentative)INTB 334Homework AssignmentsHW#1: ABSOLUTE AND COMPARATIVE ADVANTAGE (chapter 3)1. Suppose there are two countries and two goods-Country S Country FGrapes 10 labor hrs/unit of output 12Honey 2 5a. Which country has an absolute advantage in grapes? In honey?b. Can the countries specialize according to absolute advantage? Why? If not , can they specialize on the basis of comparative advantage? If so, why?c. Specify the directions of comparative advantage. d. What are the per unit of output gains/losses from specialization in this case?2. Suppose the $ absolute prices of G and H in both countries are:Country S Country FGrapes $20 per unit of output $36Honey $4 $15a. Calculate the pretrade relative price of G in terms of H. Relative price of H?b. Which country has a comparative advantage in G? In H?Remarks: 1. The above two questions are not related. No information should be taken from one question and used in the other. 2. In question 2, the variables are pries and are measured in dollars. Relative efficiencies cannot be calculated in this case.INTB 334Homework AssignmentsHW# 1: THE CLASSICAL MODEL:ABSOLUTE AND COMPARATIVEADVANTAGE (Continued)Please do the following exercises from the TextP 61: Ex. 1 Case 2 onlyP 61: Ex 6. Place good S on the horizontal axis. The fact that the autarky PS/PT increased from 5/4 to the ITOTS = 2 gives an indication of where the comparative advantage lies.Please use this information when you solve this exercise.INTB 334Homework AssignmentsHW # 3: TESTING THE CLASSICAL MODEL (chapter 5)Two countries: Italy and Greece producing olivesItaly GreeceOutput: 150 units Output: 80 unitsLabor : 30 workers Labor: 40 workersWages: $5 Wages: $2Exports: $100 Exports: $50- A real word comparative advantage for Italy over Greece in olives is measured by a ratio of Italian exports of olives to Greek exports that exceeds one. Calculate this ratio and consider it the real world.- Determine the comparative advantage according to the classical model. Is the classical model’s prediction of comparative advantage consistent with the comparative advantage in the real world given by the above example? Hint: Calculate relative productivity and relative wage.HW #4: TARIFFS (chapter 6)Homework Assignment. (Chapter 6: Tariffs)Please do the following additional exercises from the TextP 138: Ex. 7P 138: Ex 13.HW# 5: NON TARIFF BARRIERSPlease do the following exercise from the Text (Chapter 7)P 166: Ex. 9.HW# 6: THE FOREIGN EXCHANGE MARKETPlease do the following exercises from the Text (Chapter 12)P 263: Ex. 8 and