International Economics (p)

Course content

The course provides a thorough basis for understanding international trade, its causes and consequences. It contains four parts: empirical facts, theoretical framework, trade policies, and societal issues linked to trade (see Literature section for details).

This course contains both theoretical models with mathematical derivations and evidence-based research papers. It presents the workhorse models of international trade: The Ricardian model, the Heckscher-Ohlin model, the Krugman model, and the Melitz model. We will also briefly connect the theoretical framework to very recent models.

We will use two styles of empirical research: descriptive studies and causal analysis studies (e.g., using natural experiments). The course covers several recent empirical papers focusing on the Danish economy.   

This course provides the necessary knowledge of the key theoretical concepts and empirical facts to enable the student to take the advanced course in international trade (AØKK08214U Advanced International Trade).

The textbook is International Trade by Taylor and Feenstra (4th Edition), but the slides are the main material.

Specifically, we seek to answer questions such as Why do countries trade? What do they trade? Who gains and who loses from trade? What is the impact of trade policy on welfare?

The course also considers aspects of the globalization debate: Is wage inequality affected? Is the number of jobs affected? What are the implications of multinationals and offshoring? How would various policy changes (export policies) discussed in the news affect trade, welfare, and inequality?

Education

MSc programme in Economics – elective course

Bacheloruddannelsen i økonomi – Prioriteret valgfag på 3. år (angivet med et p)

The Danish BSc programme in Economics - prioritized elective at the 3rd year (symbolized by ‘p’).

The course is no longer a part of the Financial line.

 

Learning outcome

After completing the course the student is expected to be able to:

 

 Knowledge:

  • Account for why international trade arises.
  • Define and explain trade patterns under perfect and imperfect competition.

 

Skills:

  • Analyze how trade affects the behaviors of firms and consumers and how trade affects welfare and inequality.
  • Analyze how trade policy affects firm behaviour and analyze welfare implications of trade policy

 

Competencies:

  • Convert the material of the class into actionable trade policies
  • Understand, discuss and evaluate current policy proposals in light of the theory presented in the class.

 

Lectures and some exercise classes.

Below we provide a broad roadmap of the course.

 

Part 1: Globalization in the Data

 

Lecture 1. Empirical Facts

This lecture presents empirical facts in international trade, and the historical development of the field.

• Pol Antràs. "De-Globalisation? Global value chains in the post-COVID-19 age" NBER Working paper. 2020.

• Taylor and Feenstra, Chapter 1.

 

Part 2: Canonical Trade Models

 

Lecture 2. Neoclassical Trade Model: Ricardian Models

This lecture shows the role of comparative advantage (due to technology) as an explanation for international trade. We present the textbook Ricardian model and the DFS model.

• Taylor and Feenstra, Chapter 2.

• Jonathan Eaton and Samuel Kortum "Putting Ricardo to work" JEP, 2012.

 

Lecture 3. Neoclassical Trade Model: Specific-Factor Model and HOS

This lecture shows the role of comparative advantage (due to resources) as an explanation for international trade, and the impact of trade on income inequality. We present the specific-factor models and the HOS model.

• Taylor and Feenstra, Chapter 3 and 4.

 

Lecture 4. New Trade Theory

This lecture shows the role of increasing returns to scale as explanation for international trade. We present empirical facts on intra-industry trade, the Krugman 79 model, and the gravity equation.

• Paul Krugman. "Nobel Prize Lecture". 2008

• Paul Krugman. "Increasing returns, monopolistic competition, and international trade" JIE, 1979.

• Andrew Rose. "One money, one market: the effect of common currencies on trade" Economic policy, 2000.

 

Lecture 5. "New" New Trade Theory

This lecture shows the role of firm heterogeneity as another explanation for trade. We present empirical facts on firm and trade, empirical facts on firm dynamics, and the Melitz model.

• Andrew Bernard, Bradford Jensen, Stephen Redding, and Peter Schott.* Firms in International Trade. JEP, 2007.

• Marc Melitz. "The impact of trade on intraindustry reallocations and aggregate industry productivity". ECMA, 2003.

 

Part 3: Trade Policies and Trade Events

 

Lecture 6. Trade Policies

This lecture presents trade policy instruments. We document the relevant institutional setting in Denmark: WTO and European regulations. Then, we present the effects of tariffs under perfect competition.

• Taylor and Feenstra, chapter 8*

• Keith Head and Thierry Mayer "The United States of Europe: A Gravity Model Evaluation of the Four Freedoms". JEP, 2021

• Magnus T. Buus, Jakob R. Munch, Joel Rodrigue, and Georg Schaur "Do Export Support Programs affect Prices, Quality, Markups and Marginal Costs? Evidence from a Natural Policy Experiment" Working Paper. June 2021

 

 

Part 4: Societal Issues and Trade

 

Lecture 7. Job Loss

This lecture presents reduced-form evidence on the impact of trade on wages and employment using different research designs.

• US-Canada free trade agreement: Daniel Trefler*. "The Long and Short of the

Canada-U.S. Free Trade Agreement" AER, 2004

• The rise of China: David Autor, David Dorn, and Gordon Hanson. "The China

Syndrome: Local Labor Market Effects of Import Competition in the United States"

AER, 2013.

 

Lecture 8. Movement of Labor and Capital

 

This lecture describes movement of labor and capital. We analyze the impact of migration

on receiving countries.

 

• Mette Foged, Giovanni Peri. "Immigrants’ Effect on Native Workers: New Analysis on Longitudinal Data". AEJ Applied, 2016.

• Taylor and Feenstra, chapter 8

 

A “lecture” is not necessarily a three-hour session.

Microeconomics I, Microeconomics II, Macroeconomics I and Macroeconomics II from the Bachelor programme in Economics, University of Copenhagen, or similar.
Especially the mathematical formalities of microeconomics are recommended.

Note, this is not an easy class. Understanding of differentiation, calculus etc. is taking as a given and the class is heavy in models.

Schedule:
3 hours lectures a week from week 6 to 20.
2 hours exercise class a week from week 6/7 to 20/21.

The overall schema for the 3rd year and Master courses can be seen at KUnet:
MSc in Economics => "courses and teaching" => "Planning and overview" => "Your timetable"
BA i Økonomi/KA i Økonomi => "Kurser og undervisning" => "Planlægning og overblik" => "Dit skema"

Timetable and venue:
To see the time and location of lectures please press the link/links under "Timetable"/​"Se skema" at the right side of this page (F means Spring).

You can find the similar information partly in English at
https:/​/​skema.ku.dk/​ku2223uk/​module.htm
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F23; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Forår/Spring”
Press: “ View Timetable”

Please be aware:
- The study administration allocates the students to the exercise classes according to the principles stated in the KUnet.
- If too many students have wished a specific class, students will be registered randomly at another class.
- It is not possible to change class after the second registration period has expired.
- If there is not enough registered students or available teachers, the exercise classes may be jointed.
- The student is not allowed to participate in an exercise class not registered.
- All exercise classes are taught in English and it is expected that the students ask questions in English, so foreign students are included in the dialog.
- The schedule of the lectures and the exercise classes can change without the participants´ acceptance. If this occur, you can see the new schedule in your personal timetable at KUnet, in the app myUCPH and through the links in the right side of this course description and at the link above.
- It is the students´s own responsibility continuously throughout the study to stay informed about their study, their teaching, their schedule, their exams etc. through the curriculum of the study programme, the study pages at KUnet, student messages, the course description, the Digital Exam portal, Absalon, the personal schema at KUnet and myUCPH app etc.

Oral
Individual
Collective

 

Students will receive individual feedback from the lecturer.

ECTS
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
Type of assessment details
ITX-exam in the exam venues of the university.

The exam assignment is in English and must be answered in English.

Changes to the exam due to a pandemic crisis:
In the event that restrictions from a pandemic crisis may affect the conduction of the ITX-exams, the written exam and the re-sit exam will change to a 3 hours written take-home exam. The changes will be announced in study messages at KUnet and in Digital Exam.

The take-home exam is an individual exam and it is not allowed to communicate with any one about the exam assignment nor the solution at all. It is also prohibited to distribute data and other information at all. If this or alike actions happens, it will be regarded as cheating and plagiarism
Aid

No aids allowed at the written ITX-exam.

Information about allowed aids for the re-examination, please go to the section "Re-exam".

 

If the ITX-exam changes to a take-home exam due to a pandemic crisis, the written take-home exam is with all aids.

Marking scale
7-point grading scale
Censorship form
No external censorship
at the written exam.
The written ITX-exam may be chosen for external assessment by random sample.
An oral re-examination may be with external assessment.
Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.

 

In order to obtain the top grade “12”, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.

 

In order to obtain the passing grade “02”, the student must in a satisfactory way be able to demonstrate a minimal acceptable level of  the knowledge, skills and competencies listed in the learning outcomes.

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Class Instruction
  • 28
  • Preparation
  • 133
  • Exam
  • 3
  • English
  • 206

Kursusinformation

Language
English
Course number
AØKA08021U
ECTS
7,5 ECTS
Programme level
Full Degree Master
Bachelor
Duration

1 semester

Placement
Spring
- Go to 'Signup' for information about registration and enrollment.
Price

Information about admission and tuition fee: Master and Exchange Programme, credit students and guest students (Open University)

Schedulegroup
and venue:
- For teaching: Go to 'Remarks'.
- For exam and re-sits: Go to 'Exam'.
Studyboard
Department of Economics, Study Council
Contracting department
  • Department of Economics
Contracting faculty
  • Faculty of Social Sciences
Course Coordinator
  • Antoine Bertheau   (16-637076716b706730646774766a6763774267657170306d7730666d)
Teacher

See 'Course Coordinators'.

Teachers of exercise classes:
Ex. class 1:
Ex. class 2:

Please read "Remarks" regarding the schedule of the teaching

Saved on the 22-11-2022

Are you BA- or KA-student?

Are you bachelor- or kandidat-student, then find the course in the course catalog for students:

Courseinformation of students