From CEU Econ Wiki

Contents 1 Syllabus 2 News 3 Lectures 3.1 What do countries trade? 3.2 Why has trade increased so much? 3.3 Why do we still trade so little? 3.4 Does trade affect productivity? 3.5 Did globalization contribute to the rise in inequality? 4 Problem sets 4.1 Practice problems 5 Reading 5.1 Lecture 1: Preliminaries 5.2 Lecture 2: General results in trade theory 5.3 Lecture 3: Factor proportions theory 5.4 Lecture 4: Evidence on factor proportions theory 5.5 Lecture 5: Technology-based theory 5.6 Lecture 6: Evidence of technology-based theory 5.7 Lectures 7 and 8: Scale economies and trade 5.8 Lecture 9: Evidence on scale economies 5.9 Lecture 10: The extensive margin in trade 5.10 Lecture 11: Trade costs 5.11 Lectures 11 and 12: Trade policy 5.12 Lectures 14/16: Trade and productivity 5.13 Lecture 17/19: Trade and inequality

Syllabus

Media:Trade_syllabus.pdf

News

Problem Set 2 is out.

Lectures

• Lecture 1: Preliminaries (new marked-up slides)
• Lecture 2: General results in trade theory (new marked-up slides)

What do countries trade?

• Lecture 3: Factor proportions theory (new marked-up slides)
• Lecture 4: Evidence on the factor proportions theory (new marked-up slides)
• Lecture 5: Technology-based theory (new marked-up slides)
• Lecture 6: Evidence on technology-based theory (new marked-up slides)

Why has trade increased so much?

• Lecture 7: Scale economies and trade (new marked-up slides)
• Lecture 8: Evidence on scale economies (new marked-up slides)
• Lecture 9: The extensive margin in trade (new marked-up slides)

Why do we still trade so little?

• Lecture 10-11: Trade costs (new marked-up slides)
• Lecture 12: Trade policy (new marked-up slides)
• Lecture 13: Trade policy (new marked-up slides)

Does trade affect productivity?

• Lecture 14: Heterogeneous firms (new marked-up slides)
• Lecture 15: Heterogeneous firms (new marked-up slides)
• Lecture 16: A quantitative assessment of the Melitz model (The slides that are crossed out were skipped in class. They may still be useful to follow the reasoning.)
• Lecture 17: Imported inputs and productivity

Did globalization contribute to the rise in inequality?

• Lecture 19: Trade and inequality: Facts
• Lecture 20: Matching and inequality
• Lecture 21: Capital-skill complementarity from an international trade perspective
• Lecture 22: Trade and poverty

Problem sets

Even though you are allowed to discuss the problems, please do write them up separately. You are not allowed to share your final solution with other students. If I see mindless copying, all parties involved will get zero credit.

• Problem Set 1. Due by 5.30pm, March 1.
• 2012_Trade_Problem_Set_2. Due by 11.59pm, April 20.

Clarifications:

1. You can start from the Anderson-van Wincoop formula for bilateral trade, you do not need to derive it.
2. You can assume revenue is exogenous (i.e., fixed when you do the comparative statics)

Practice problems

• http://koren.hu/teaching/index.php5?title=International_Trade&oldid=4168#Problem_sets
• http://koren.hu/teaching/images/b/b5/Smplxm.pdf

Reading

Required reading is denoted by *. All other readings are recommended. Also check my del.icio.us bookmarks for recommended reading.

Lecture 1: Preliminaries

• * Dixit and Norman, Chapter 2.
• Aizenmann and Brooks, 2008. "Globalization and Taste Convergence: The Case of Wine and Beer" Review of International Economics [1]

Lecture 2: General results in trade theory

• * Bernhofen and Brown, 2004. "A Direct Test of the Theory of Comparative Advantage: The Case of Japan" JPE [2]

Lecture 3: Factor proportions theory

• * Helpman and Krugman, Chapter 1.
• Deardorff, "Introduction to the Lerner diagram." [3]

Lecture 4: Evidence on factor proportions theory

• * Feenstra, Chapter 2.
• Romalis, 2004. "Factor proportions and the structure of commodity trade." American Economic Review. [4]

Lecture 5: Technology-based theory

• * Dornbusch, Fisher and Samuelson, “Comparative Advantage, Trade, and Payments in a Ricardian Model

with a Continuum of Goods,” American Economic Review, 67(5), 1977. [5]

Lecture 6: Evidence of technology-based theory

• * Glub and Hsieh, 2000. "Classical Ricardian Theory of Comparative Advantage Revisited" [6]
• Costinot, Donaldson and Komunjer, 2012. "What Goods Do Countries Trade? A Quantitative Exploration of Ricardo's Ideas" [7]

Lectures 7 and 8: Scale economies and trade

• * HK 1985, Chapters 6.1 and 6.2.

Lecture 9: Evidence on scale economies

Lecture 10: The extensive margin in trade

• * Hummels and Klenow, 2005. "The Variety and Quality of a Nation’s Exports". American Economic Review [8]
• Armenter and Koren, 2008. "A Balls-and-Bins Model of Trade". working paper [9]

Lecture 11: Trade costs

• * Anderson and van Wincoop, 2004. "Trade Costs". Journal of Economic Literature [10]
• Hummels, 2001. "Towards a Geography of Trade Costs". working paper.

Lectures 11 and 12: Trade policy

• * Feenstra, Chapter 7 (up to page 220), Chapter 9
• Broda, Limao and Weinstein. http://faculty.chicagobooth.edu/christian.broda/website/research/unrestricted/Broda_OptimalTariffs_ForthcomingAER.pdf

Lectures 14/16: Trade and productivity

• * Melitz (2003), “The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity”, Econometrica [11]
• Armenter and Koren (2009), "Economies of Scale and the Size of Exporters" [12]
• Halpern, Koren and Szeidl (2009), "Imported Inputs and Productivity" [13]

Lecture 17/19: Trade and inequality

• * See the Stolper-Samuelson theorem in Feenstra, Chapter 1.
• * Goldberg and Pavcnik (2007), "Distributional Effects of Globalization in Developing Countries" JEL [14]