Lahore University of Management Sciences

Econ 351 International Trade

Fall 2015

Instructor AntonioMarasco
RoomNo. 258
OfficeHours TBA
Email Antonio@lums.edu.pk
Telephone 04235608093
TA TBA
TAOfficeHours TBA
CourseURL(ifany)

CourseBasics
CreditHours 4
Lecture(s) NbrofLec(s)PerWeek 2 Duration 110
Recitation/Lab(perweek) NbrofLec(s)PerWeek Duration
Tutorial(perweek) NbrofLec(s)PerWeek TBA Duration TBA

CourseDistribution
Core
Elective Elective
OpenforStudentCategory All
CloseforStudentCategory None

COURSEDESCRIPTION
Thisisathirdyearcourseininternationaltrade.TheInternationalTradecourseisstructuredintotwoparts.Thefirstpartintroducesstudentsto
the theoretical models of trade which explain the rationale, pattern and effect of trade on the participant countries. The second part of the
coursefocusesontradepolicy.Herethevariousinstrumentsoftradepolicyareanalyzed;thepoliticaleconomyoftradepolicyintroducedand
finallythedebatesintradepolicyarehighlightedfromtheperspectiveofthedevelopingworld.Theobjectivesofthecoursearethustwofold.The
firstistoexplainhoweconomictheorycanbeusedtounderstandthereasonswhycountriestradewitheachotherandthewelfareimpactofthis
tradeonthecountriesasawholeandongroups(consumers,producers,government)withinthese.Thesetheoreticalmodelswillbemotivated
byrealworldexamplesandtheirpredictionscorroboratedbyempiricalevidence.Thesecondobjectiveistointroducestudentstothemenuof
policyinterventionsandinstrumentsavailabletocountriesusedtolimitorenhancetradesothattheyunderstandtheimpactofthesepolicieson
economicwelfareofthecountryandthevariousgroupswithinacountry.Thepoliticaleconomyaspectoftradepolicywillalsobecoveredwith
the objective of informing students about the role of competing interests and lobbying behavior in policy making. Finally, students would be
introducedtocurrentandhistoricaltradepolicydebatesandissuesinbothdevelopinganddevelopedcountriesunderthebroaderambitofthe
WTO.

COURSEPREREQUISITE(S)

IntermediateMacroeconomics(Econ221)

COURSEOBJECTIVES

Theobjectivesofthecoursearetwofold.Thefirstistoexplainhoweconomictheorycanbeusedtounderstandthereasons
whycountriestradewitheachotherandthewelfareimpactofthistradeonthecountriesasawholeandongroups(consumers,
producers,government)withinthese.Thesetheoreticalmodelswillbemotivatedbyrealworldexamplesandtheirpredictions
corroboratedbyempiricalevidence.Thesecondobjectiveistointroducestudentstothemenuofpolicyinterventionsand
instrumentsavailabletocountriesusedtolimitorenhancetradesothattheyunderstandtheimpactofthesepolicieson
 Lahore University of Management Sciences
economicwelfareofthecountryandthevariousgroupswithinacountry.Thepoliticaleconomyaspectoftradepolicywillalso
becoveredwiththeobjectiveofinformingstudentsabouttheroleofcompetinginterestsandlobbyingbehaviorinpolicy
making.Finally,studentswouldbeintroducedtocurrentandhistoricaltradepolicydebatesandissuesinbothdevelopingand
developedcountriesunderthebroaderambitoftheWTO.

LearningOutcomes
Bytheendofthecoursethestudentshouldbeabletodemonstrategeneralknowledgeandunderstandingofinternational
tradetheory;demonstrategeneralknowledgeandcriticalunderstandingofinternationaltradepolicy;understandand
manipulatesimpleeconomicmodels,bothgraphicallyandanalytically;readcriticallytheempiricalliterature,intheareaof
publicpolicy;applycriticalanalysistothetopicsofthecourse;reviewtherelevantliteratureandevidence.



GradingBreakupandCoursePolicies

Quizzes(4outof5,drop1):20%
MidtermExamination:40%
FinalExamination:40%

Attendancepolicy:
Students are expected to attend classes. Absenteeism is not conducive to fruitful learning and you will have to put in a lot more effort to be
successfulinthiscourseifyouskipalargenumberofclasses.Attendanceentersyourassessmentthroughincreasingthelikelihoodofabetter
gradeintheremaininginstruments.Inextremecases,absenteeismmayleadtoanFgrade.Itisalsohighlyrecommendedthatyoucometoclass
ontime(itisverydisruptivewhenstudentsenterclasslate).Leavingthelectureearlyisallowedonlyifpreviouslyagreedwiththeinstructor.

Coursestructure:
Thecourseissplitintotwopartsandwillhavetwoexams.ThemidtermExamwillincludetopicscoveredinthefirsthalfofthesemester.The
finalexamwillbecomprehensiveandwillbeheldduringtheexaminationweekattheendofthesemester.Therewillalsobefivequizzes,outof
whichyoucandropone.Theremainingfourquizzeswillbeworth5markseach(total:20).
Ifonequizbeyondtheoneyoucandropismissedduetoillnessorothervalidreasons(suchaswedding,deathorseriousillnessofaclosefamily
member)amedicalcertificateorothervaliddocumentmustbesubmittedwithinoneweekofthemissedquiz.Thegradeforthemissedquizwill
betheaveragefromtheremainingquizzestaken.Ifnodocumentationisforthcomingthequizwillreceiveamarkofzero.Therearenomakeup
quizzes.
MissedmidtermandfinalexamsarehandledcentrallybytheOfficeofStudentAffais(OSA)towhichyouhavetosubmitrequireddocumentation.
IftheOSAapprovesyourcase,makeupsmaybeprovidedoranaveragegradefromtheremaininginstrumentsmaybegivenformissedmidterm
andfinalexams,dependingoncircumstances.

Cheating:
Cheatingandplagiarismwillnotbetolerated.Attemptstocheatinanyway,shape,orformwillresultinanFforthecourseandwillbe
reportedtotheDisciplinaryCommittee.

ExaminationDetail

Yes/No:Yes
Midterm CombineSeparate:Combine
Exam Duration:100minutes
ExamSpecifications:Closedbooksandnotes,helpsheetnotallowed,calculatorusageallowed


Yes/No:Yes
CombineSeparate:Combine
FinalExam
Duration:100minutes
ExamSpecifications:Closedbooksandnotes,helpsheetnotallowed,calculatorusageallowed

 Lahore University of Management Sciences

Textbook(s)/SupplementaryReadings
RequiredText:
th
InternationalEconomics:TheoryandPolicy;9 edition;Krugman,ObstfeldandMelitz(2012)(KOM)
Suggestedsupplementaryreadings:
nd
InternationalEconomics;2 edition,FeenstraandTaylor(2012)(FT)
Otherreadingsthatmaybeaddedlaterwouldbemadeavailableeitheronlineorduringlectures

COURSEOVERVIEW
Recommended
Module Topics
Readings
Whatisinternationaleconomicsabout?Whystudyinternationaltradetheory?The required: KOM: Ch. 1,2,3; additional: FT:
1 gravity model. The principle of Comparative advantage and the Ricardian model. Ch.1,2
EmpiricalevidenceontheRicardianmodel.
Theroleoffactorabundance:patternoftradeandspecialisationintheHecksherOhlin required:KOM:Ch.4,5,6;additional:FT:
(HO)model.EmpiricalevidenceontheHOmodel.Specificfactors,patternof Ch.3,4,5
2 tradeandlocaldistributionofincomeintheSpecificFactors(SF)model.Comparing
theimplicationsoftheHOmodelandtheSFmodel.Thestandardtrademodel:terms
oftrade,internationaltransfersandgrowth.
Economiesofscale,imperfectcompetitionandtradepatterns. required: KOM: Ch.7,8; additional: FT:
3 Ch.6,7;

Policyinstruments(tariffs,exportsubsidiesandquotas)inperfectandimperfectly required: KOM: Ch.9,10 additional: FT:
4 competitivemarkets.Thepoliticaleconomyoftradepolicy:argumentsforandagainst Ch.8,9;
freetrade,incomedistributionandtradepolicy,andinternationaltradeagreements.
Trade Policy in Developing countries: Import substitution Industrialization, Export required: KOM: Ch. 11,12; additional: FT:
5 OrientedIndustrialization. Controversiesintradepolicy. Ch.10,11;