ECON 35101: International Macroeconomics and Trade University of Chicago, Fall Quarter, 2015 Syllabus

Transcription

1 ECON 35101: International Macroeconomics and Trade University of Chicago, Fall Quarter, 2015 Syllabus Time: Wednesday 9:00-11:50 am Room: HC3B Instructor: Ralph Ossa Office: Booth ralph.ossa at chicagobooth.edu Office hours: By appointment Teaching Assistant: Nick Tsivanidis ntsivanidis at uchicago.edu All class-related material will be posted on Chalk. COURSE OUTLINE This course gives an introduction to international trade and trade policy at the PhD level. A detailed overview of the covered topics is given below. Students are strongly encouraged to take it in conjunction with Prof. Tintelnot s course in the winter quarter which builds directly on it and focuses on more specialized material. Together, these courses aim to equip students with the essential knowledge to conduct independent research in this area. EVALUATION Grades are determined from an empirical project (1/3), a quantitative project (1/3), and a take-home final examination (1/3). The projects aim to familiarize you with some commonly used data sources and computational tools. To get ready, make sure that you have access to Stata and Matlab. The projects will be posted soon along with detailed instructions. The take-home exam will comprise of analytical questions and will be posted during 10th week of classes. Both projects and the take-home exam will be due on 12/11/2015, i.e. the last day of finals week.

2 TOPICS and READINGS Topic 1: Gravity equation The gravity equation is the most successful empirical relationship describing trade flows. This lecture explains its theoretical foundations and reviews its key empirical applications. Our main resource will be Head and Mayer (2014). - Head, K. and T. Mayer Gravity Equations: Workhorse, Toolkit, and Cookbook. In : Handbook of International Economics Topic 2: Ricardian trade theory This lecture covers Ricardian trade theory which describes how cross-country differences in technology shape the pattern of international trade. We discuss the main models as well as the relevant empirical evidence. Our main focus will be on Dornbusch, Fischer, and Samuelson (1977) and Eaton and Kortum (2002). - Dornbusch, R., S. Fischer, and P. Samuelson Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods. American Economic Review 67(5): Eaton, J. and S. Kortum Technology, Geography, and Trade. Econometrica 70(5): Topic 3: Factor proportions theory This lecture covers the Heckscher-Ohlin model which describes how cross-country differences in endowments shape the pattern of international trade as well as the associated empirical evidence. We will mainly rely on the lecture slides but students might also find it helpful to consult the relevant chapters of Feenstra (2003). - Feenstra, R Advanced International Trade. Princeton University Press

3 Topic 4: General neoclassical theory This lecture provides a discussion of the gains from trade and the law of comparative advantage in general neoclassical environments and present some related empirical evidence. We will mainly rely on the lecture slides but students may also find it useful to read the relevant chapters of Dixit and Norman (1980). - Dixit, A. and V. Norman Theory of International Trade: A Dual, General Equilibrium Approach. Cambridge Economic Handbooks Topic 5: New trade theory This lecture introduces trade models featuring increasing returns and product differentiation and discusses the relevant empirical evidence. Our main focus will be on Krugman (1979), Krugman (1980), Feenstra (1994), and Broda and Weinstein (2006). - Krugman, P Increasing returns, monopolistic competition, and international trade. Journal of International Economics 9: Krugman, P Scale economies, product differentiation, and the pattern of trade. American Economic Review 70(5): Feenstra, R New product varieties and the measurement of international prices. American Economic Review 84(1): Broda, C and D. Weinstein Globalization and the gains from variety. Quarterly Journal of Economics 121(2): Topic 6: Heterogeneous firms This lecture covers trade models allowing for firm heterogeneity and surveys the empirical evidence. Our main readings will be Melitz (2003), Bernard, Jensen, Eaton, and Kortum (2003), Eaton, Kortum, and Kramarz (2009), and Redding and Melitz (2014). - Melitz, M The impact of trade on intra-industry reallocations and aggregate productivity. Econometrica 71: Bernard, A., J. Eaton, B. Jensen, and S. Kortum Plants and productivity in international trade. American Economic Review 93: Dekle, R., J. Eaton., and S. Kortum Unbalanced trade. American Economic Review 97(2):

4 - Redding, S and M. Melitz Heterogeneous firms and Trade. Handbook of International Economics Topic 7: Gains from trade This lecture covers recent approaches to measuring the gains from trade. We will focus on Arkolakis, Costinot, and Rodriguez-Clare (2012), Melitz and Redding (2015), Ossa (2015), and Hsieh, Li, Ossa, and Yang (2015). - Arkolakis, C., A. Costinot, and A. Rodriguez-Clare New trade models, same old gains?. American Economic Review 102(1): Melitz, M. and S. Redding New trade models, new welfare implications. American Economic Review 105(3): Ossa, R. Forthcoming. Why trade matters after all. Journal of International Economics - Hsieh, C., N. Li, R. Ossa, and M. Yang Accounting for the new gains from trade liberalization. Mimeo Topic 8: Heterogeneous demands and the home market effect This lecture covers recent work featuring non-homothetic preferences and will be taught by Professor Jonathan Dingel. The main readings are Krugman (1980, section III), Fajgelbaum, Grossman, and Helpman (2011), Dingel (2015), and Caron, Fally, and Markusen (2014). - Krugman, P Scale economies, product differentiation, and the pattern of trade. American Economic Review 70(5): Fajgelbaum, P., G. Grossman, and E. Helpman Income distribution, product quality, and international trade. Journal of Political Economy 119(4): Dingel, J The determinants of quality specialization. Mimeo - Caron, J., T. Fally, and J. Markusen International trade puzzles: A solution linking production and preferences. Quarterly Journal of Economics 129(3):

5 Topic 9: Introduction to commercial policy This lecture gives an introduction to the field of commercial policy covering basic theories, facts, and trade law. In addition to the relevant chapters of Dixit and Norman (1980), our main readings will be Grossman and Helpman (1994), Bagwell and Staiger (1999), and Ossa (2011). - Dixit, A. and V. Norman Theory of International Trade: A Dual, General Equilibrium Approach. Cambridge Economic Handbooks - Grossman, G. and Elhanan Helpman Protection for sale. American Economic Review 84(4): Bagwell, K. and B. Staiger An economic theory of GATT. American Economic Review 89(1): Ossa, R A new trade theory of GATT/WTO negotiations. Journal of Political Economy 119(1): Topic 10: Quantitative models of commercial policy This lecture provides an in-depth discussion of quantitative models of commercial policy. Our main resource will be my chapter in the recent Handbook of Commercial Policy but we will also draw from Ossa (2014) and Ossa (2015). - Ossa, R Quantitative models of commercial policy. Mimeo - Ossa, R Trade wars and trade talks with data. American Economic Review 104(12): Ossa, R A quantitative analysis of subsidy competition in the US. Mimeo