69966 - International Economics (in Buenos Aires)

Learning outcomes

At the end of the course students are able to analyze several issues related to macroeconomic policy in open economies and to the evolution of foreign exchange markets. Specifically, students are exsposed to the determination and dynamics of exchange rates, on the choice between flexible and fixed exchange rates, with special attention to the European Monetary Union, on the international role of the euro and its relationship with the dollar and, finally, on speculative attacks on currencies and the design of a new international financial architecture.

Course contents

1 Course presentation. Introduction to international trade. Classical trade theory.

2 Working with international trade data. Trade indicators.

3 Neoclassical trade theory: the Heckscher-Ohlin Model and the Specific Factors Model (Samuelson & Jones)

4 Neoclassical trade theory: The standard trade model. Reciprocal offer curves. International trade and economic growth.

5 Alternative Theories of International Trade: Intra-industry trade. Economies of scale. Imperfect competition. Dumping.

6 Alternative Theories of International Trade: Demand-based approaches. New economic geography. Introduction to gravity models. Offshoring (or Offshoring model of trade).

7 International factor mobility.

8 Trade policy: Introduction. Tariffs. Effective and nominal protection.

9 Trade policy: Trade quotas and tariff-rate quotas. Export subsidies. Export taxes and export quotas. Domestic support

10 Trade policy: Other trade policy measures. The political economy of trade policy.

11 International trade negotiations and agreements: Theory of trade integration The WTO. The EU. Other trade agreements.

12 National and international accounts. Introduction to exchange rates and foreign exchange markets.

13 Determination of exchange rates in the short run: The Asset Approach.

14 Determination of exchange rates in the long run: The Asset Approach in the long run. The Law of One Price.

15 Determination of exchange rates in the long run: Purchasing-Power Parity. The Monetary Approach to the Exchange Rate. Real exchange rate approach.

16 Equilibrium in an open economy: DD-AA model and the effects of temporary and permanent changes in macroeconomic policies. Adjustment of the balance of payments over time: Elasticity, absorption and monetary approaches.

17 Fixed vs. floating exchange rates.

18 Monetary integration and the theory of optimal currency areas. The Euro Area.

19 The tradable–non-tradable (T-NT) model. Dutch disease.

20 Review class.

Readings/Bibliography

Required readings:

Manuals

• FEENSTRA, Robert C. & TAYLOR, Alan M. International Economics. 3rd ed. 2014. Worth Publishers, New York. 1014 p. ISBN: 978-1-4292-7842-3.
• KRUGMAN, Paul R.; OBSTFELD, Maurice & MELITZ, Mark J. Economía internacional: teoría y política. 9a ed., 2012. Pearson, Madrid. 752 p. ISBN: 84-8322-8173
• APPLEYARD, Dennis R. & FIELD, Alfred J. Economía internacional. 4a ed. 2012. McGraw Hill, Madrid, 857 p. ISBN: 0-256-06701-4 / AF (1997)
  

Since most topics are covered in all three manuals, students may choose to study from any of them, in any edition and in any language. It is suggested to choose one as the main reference and consult the other two for specific topics that are not included or well developed in their chosen book. 

 

Other required readings:

• DE GRAUWE, P. Economics of Monetary Union. 14^th Edition. 2023. Oxford University Press. Part I. Previous editions are also accepted.
• GARCÍA, P.; LÓPEZ, A. & ONS, A. (2021). Las políticas hacia la inversión extranjera directa. BID-INTAL: Washington. Capítulo 1. “Inversión Extranjera Directa: motivaciones, estrategias, determinantes e impactos “ http://dx.doi.org/10.18235/0003016
• KRUGMAN, P. What's new about the new economic geography? Oxford review of economic policy, vol. 14, no 2, p. 7-17. 1998. https://academic.oup.com/oxrep/article/14/2/7/515159
• SKULLY, D. W., et al. Economics of tariff-rate quota administration. 2001. US Department of Agriculture, Economic Research Service. https://www.ers.usda.gov/publications/pub-details?pubid=47389
• VENABLES, A. J. Regional Integration Agreements: a force for convergence or divergence? World Bank policy research working paper, 1999, no 2260. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/397421468766807036/regional-integration-agreements-a-force-for-convergence-or-divergence

Supplementary readings (Optional):

• ANTRÀS, P.. Conceptual Aspects of Global Value Chains. Policy Research Working Paper; No. 9114. 2020, World Bank: Washington, DC. https://openknowledge.worldbank.org/handle/10986/33228

• ANTRÀS, P.. The Uncharted Waters of International Trade. NBER Working Paper No. 33312. 2024. NBER: Cambridge. https://www.nber.org/papers/w33312

• BEATON, K.; CERRA, V.; HADZI-VASKOV, M. Trade, Jobs, and Inequality. 2021. IMF: Washington, DC. https://www.imf.org/en/Publications/WP/Issues/2021/07/01/Trade-Jobs-and-Inequality-461338

• EATON, J. & KORTUN, S. “Putting Ricardo to work” Journal of Economic Perspectives, 2012, vol. 26, issue 2, 65-90. https://www.aeaweb.org/articles?id=10.1257/jep.26.2.65

• EICHENGREEN, B. Does the Fed Care About the Rest of the World? NBER Working Paper No. 19405. 2013. NBER: Cambridge. https://www.nber.org/system/files/working_papers/w19405/w19405.pdf

• FRENKEL, R. “Globalización y crisis financieras en América Latina”. Revista de la CEPAL No. 80. 2003. CEPAL: Santiago. https://repositorio.cepal.org/handle/11362/10894

• INTERNATIONAL MONETARY FUND (IMF). 2019 External Sector Report: The Dynamics of External Adjustment. 2019. Washington: IMF. Chapter 2. https://www.imf.org/en/Publications/ESR/Issues/2019/07/03/2019-external-sector-report

• IRWIN, D. Does Trade Reform Promote Economic Growth? A Review of Recent Evidence. 2019. Working Paper. Peterson Institute for International Economics (PIIE): Washington. https://www.piie.com/sites/default/files/documents/wp19-9.pdf

• LÓPEZ GONZÁLEZ, J. & JOUANJEAN, M.A. Digital Trade: Developing a Framework for Analysis, 2017. OECD Trade Policy Papers, No. 205, OECD Publishing, Paris, https://doi.org/10.1787/524c8c83-en.

• PAVLOVA, E.; FROHM, E.; GUNELLA, V. & de SOYRES, F. Global value chains and export elasticities: All linkages matter. 2018. VoxEU. https://cepr.org/voxeu/columns/global-value-chains-and-export-elasticities-all-linkages-matter

• PIERMARTINI, R. The Role of Export Taxes in the Field of Primary Commodities. 2004. World Trade Organization Discussion Paper. https://www.wto.org/english/res_e/booksp_e/discussion_papers4_e.pdf

• REDDING, S. Spatial economics. NBER Working Paper No. 33125. 2024. National Bureau of Economic Research: Cambridge, MA. https://www.nber.org/system/files/working_papers/w33125/w33125.pdf

• RODRIK, D. “What Do Trade Agreements Really Do?,” Journal of Economic Perspectives, 32 (2), 73-90. 2018. https://drodrik.scholar.harvard.edu/files/dani-rodrik/files/what_do_trade_agreements_really_do.pdf

• STANTCHEVA, S. Understanding of Trade. 2023. NBER Working Paper No. 30040. National Bureau of Economic Research: Cambridge, MA. https://www.nber.org/system/files/working_papers/w30040/w30040.pdf

Videos

• Edwards, Haley (2017). What global trade deals are really about (hint: it's not trade). TEDxMidAtlantic: Washington DC (Video): https://www.youtube.com/watch?v=-v3uqD1hWGE

• Peterson Institute for International Economics (PIIE) (2017). Why, After 200 Years, Can’t Economists Sell Free Trade? PIIE: Washington (Video): https://www.youtube.com/watch?time_continue=135&v=_9VHWjDg4lw

• Peterson Institute for International Economics (PIIE) (2018). How Trade Helps Each Side. PIIE: Washington (Video): https://www.youtube.com/watch?time_continue=111&v=6TeNgOGHEFc

Podcast episodes

• Bown, C. “Moving workers across Europe”. Trade Talks Episode 197. Peterson Institute for International Economics. November 26, 2023. https://tradetalkspodcast.com/podcast/197-moving-workers-across-europe/

• Bown, C. “How poorer Americans ended up paying for US tariffs”. Trade Talks Episode 163. Peterson Institute for International Economics. July 19, 2022. https://tradetalkspodcast.com/podcast/163-how-poorer-americans-ended-up-paying-for-us-tariffs/

• Keynes, S.; Bown, C. “Tackling climate change with a carbon border adjustment mechanism”. Trade Talks Episode 156. Peterson Institute for International Economics. July 25, 2021. https://www.tradetalkspodcast.com/podcast/156-tackling-climate-change-with-a-carbon-border-adjustment-mechanism/

• Keynes, S.; Bown, C. “Europe’s trade policy and open strategy autonomy”. Trade Talks Episode 157. Peterson Institute for International Economics. September 27, 2021. https://www.tradetalkspodcast.com/podcast/157-europes-trade-policy-and-open-strategic-autonomy/

Teaching methods

The main instructional approaches used in the course are:

- Lectures

- Practical exercises

- Group work

- Case studies

Assessment methods

Students must attend 75% of lessons. Though not compulsory, participation in class and work assignments is strongly encouraged.

Course evaluation is defined as the following:

Component Weight (%)

1^st Midterm Exam 50

2^nd Midterm Exam 50

Or

Final Exam 100

- Exam structure:

The final exam is a written exam in which students must solve various exercises on the course topics. It consists of two parts: a short case where students are required to apply theoretical knowledge to a practical situation (80% of the exam), and multiple-choice questions related to the same case (20% of the exam).

To each exercise a given maximum number of points is associated, and to get it the student must solve correctly the exercise and all the steps must be justified. The theoretical maximum number of points achievable in case of a perfect exam is 30. A minimum level of 18 points is required to pass the exam.

- Exam policy:

Students can attend a mid-term exam (not compulsory) in a specific date after lesson #10, and then the second mid-term exam at the end of the course. The grades of the two mid-term exams will be averaged to compute the “final written exam” grade.

Those who positively pass the first mid-term exam (i.e. grade greater or equal to 18), have the chance to take the second mid-term exam. The second mid-term can be taken only once. Therefore, if a student does not pass the second mid-term exam (or opts for a re-take), s/he can attend only total exams from that moment on.

Grading scale:

< 18: failed

18-23: sufficient

24-27: good

28-30: very good

30 e lode: outstanding

Students with disability or specific learning disabilities (DSA) are required to make their condition known to find the best possible accommodation to their needs.

Teaching tools

Tools, platforms, or resources used during the course:

- Learning platform: The slides and the team-work assignments are included in Teams

- Presentation software: PowerPoint

- Communication tools: Email; Teams.

- Collaborative tools: Teams

- Other digital tools/software: Excel, Genially, Mentimeter, Kahoot!, Educaplay.

Office hours

See the website of Romina Eliana Gayà