58606 - Topics in International Trade

Course Unit Page

Academic Year 2021/2022

Learning outcomes

The aim of the class is to enable students to go through advanced topics in international economic integration. Mainstream recent theoretical and empirical contributions on trade will be presented. Specific emphasis will be devoted to trade policies, income distribution and welfare effects of trade restrictions, trade and environment, geographic agglomeration. The last section of the lectures will dwell on social choices and/or political economy of trade.

Course contents

Prerequisites: Knowledge of International Economics (to the equivalent of 25751), of Econometrics (to the equivalent of 93674), and of the statistical software R are strongly recommended.

A) Space, trade and agglomeration

Introduction to some stylized facts [Slides]

The Dixit-Stiglitz model of monopolistic competition [Slides]

Trade, agglomeration and market size [Slides]

The Core-Periphery model (Krugman) [Slides]

The gravity equations of trade. Trade flows in a generalized CES Armington model. The fixed effect gravity estimator. The ratio gravity estimator. [Slides]

Economic geography and international inequality (Redding-Venables) [Slides]

The costs of remoteness: Evidence from German division and reunification (Redding-Sturm) [Slides]

Trade and gravity with production heterogeneity. Perfect competition (Eaton-Kortum). [Slides]

B) Economic and political consequences of trade shocks

The China trade shock in the USElectoral consequences of rising trade exposure (Autor et al). [Slides]

C) Text analysis Lab with R

Representing text as data. Pre-processing steps (stopwords, tokenizing, stemming). N-grams. Word-counting, tf-idf and text-similarity.

Statistical methods. Dictionary-based methods. Penalized linear models.

Generative language models: unsupervised methods. Topic models.

Generative language models: supervised methods. Naïve bayes. Word-embeddings.

Practical Rules-of-Thumb.

Readings/Bibliography

Textbooks

Allen T., Arkolakis C. (2016) Elements of Advanced International Trade, Yale University. Online manuscript.

Combes P.-P., Mayer T., Thisse J.-F. (2008) Economic Geography: The Integration of Regions and Nations, Princeton University Press. ISBN: 978-0-691-13942-5. Three copies of this textbook are available at the Central Library Roberto Ruffilli (two copies are available for borrowing, the other is not).

Another useful textbook is: Fujita M., Krugman P., Venables A.J. (1999) The spatial economy: cities, regions and international trade, MIT Press. ISBN: 978-0-262-56147-1. A copy of this textbook is available at the Central Library Roberto Ruffilli.

Compulsory papers readings

Autor D., Dorn D., Hanson G., Majlesi K. (2020) Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure. American Economic Review, 110, 3139-3183.

Eaton J., Kortum S. (2002) Technology, Geography, and Trade, Econometrica, 70, 1741-1779.

Redding S., Sturm D. (2008) The Costs of Remoteness: Evidence from German Division and Reunification, American Economic Review, 98, 1766-1797.

Redding S., Venables A.J. (2004) Economic Geography and International Inequality, Journal of International Economics, 62, 53-82.

Supplementary readings

Economic Sciences Nobel Prize Committee (2008) Trade and Geography - Economies of Scale, Differentiated Products and Transport Costs, Royal Swedish Academy of Sciences. Online scientific background.

Teaching methods

Hybrid teaching.

Assessment methods

The exam consists of two sections, A (theory) and B (empirics). Students need to answer to two out of three questions from section A, and to the question in section B.

In case of a positive final mark the student has the right to renege on the mark only once.

Teaching tools

Lecture Notes are created with Microsoft OneNote and are immediately shared with students.

Video recorded lectures are available on the Microsoft Stream platform. Please visit the dedicated website.

Office hours

See the website of Gaetano Alfredo Minerva