78175 - International Trade: Theory and Applications

Learning outcomes

This course will introduce students to selected key issues at the frontier of research on the effects of the international mobility of goods and factors on productivity, with special emphasis on the effects of global competition and immigration. By the end of the course students will gain knowledge of recent theoretical as well as empirical developments and will become able to build on them their own critical views on the selected issues.

Course contents

The aim of the course is to provide students with contemporary tools for the analysis of the main issues concerning international trade in the age of globalization and accelerated technological change. The focus is on the firm-level approach originated from “new trade theory”, in particular on the implications of market structure for the gains and losses from trade.

 

Topics:

1.       Trade and Competition (Brander-Krugman)

2.       Trade, Scale and Product Variety (Krugman)

3.       Geography and Trade (Krugman-Venables)

4.       Trade and Selection (Melitz)

5.       Gains from Trade and Trade Policy (Arkolakis-Costinot-Rodriguez Clare)

Readings/Bibliography

Compulsory readings:

Arkolakis, C., A. Costinot and A. Rodriguez-Clare (2012) “New trade models, same old gains?”, American Economic Review 102, 94-130.

Bernard, A., S. Redding and P. Schott (2007), “Firms in international trade”, Journal of Economic Perspectives, 21, 105-130.

Brander, J. and P. Krugman (1983), “A ‘reciprocal dumping' model of international trade”, Journal of International Economics 15, 313-321.

Costinot, A. and A. Rodriguez-Clare (2014) “Trade theory with numbers: Quantifying the consequences of globalization”, in Helpman Elhanan, Rogoff Kenneth and Gita Gopinath, eds., Handbook of International Economics, Vol. 4, Elsevier.

Krugman, P. (1980) “Scale economies, product differentiation and the pattern of trade”, American Economic Review 70, 950-959.

Krugman, P. (1991) “Increasing returns and economic geography”, Journal of Political Economy 99, 483-499.

Krugman P. and A. Venables (1995) “Globalization and the inequality of nations”, Quarterly Journal of Economics 110, 857-880.

Mayer, T. and G. Ottaviano (2008), “The happy few: The internationalisation of European firms”,

Intereconomics 43, 135-148.

Melitz, M. (2003), “The impact of trade on intra-industry reallocations and aggregate industry productivity”, Econometrica 71, 1695-1726.

Melitz, M. and G. Ottaviano (2008) “Market size, trade, and productivity”, Review of Economic Studies 75, 295-316.

Ottaviano, G., T. Tabuchi and J.-F. Thisse (2002), “Agglomeration and Trade Revisited”, International Economic Review 43, 409-436.

Optional readings (broader overviews):

Baldwin, R., Forslid R., Martin P., Ottaviano G.. and F. Robert-Nicoud (2003), “Economic Geography and Public Policy” (Princeton: Princeton University Press).

Fujita, M., P. Krugman and A. Venables (1999), “The Spatial Economy “(Cambridge MA: MIT Press).

Helpman, E. and P. Krugman (1985), “Market Structure and Foreign Trade” (Cambridge MA: MIT Press).

Helpman, E., K. Rogoff and G. Gopinath (2014), “Handbook of International Economics: Vol. 4”, (Amsterdam: Elsevier).

Teaching methods

Presentation and discussion of selected core papers for each topic with an overview of related literature. By the end of the course students should have acquired a clear understanding of the topics covered being able to use the taught tools for the analysis of international trade issues.

Assessment methods

Final written exam.

Teaching tools

Lecture notes and slides.

Office hours

See the website of Gianmarco Ireo Paolo Ottaviano