Module description
This course provides a rigorous introduction to the theory and empirics of international trade for students with a solid grounding in microeconomics. Drawing primarily on Krugman, Obstfeld and Melitz, we cover the canonical models of trade — from Ricardian comparative advantage and factor proportions theory to the New Trade Theory of increasing returns and product differentiation — as well as the role of firms in shaping trade patterns. The course examines the gains from trade, the distributional consequences of openness, and the rationale for trade policy including tariffs, quotas, and strategic intervention. Students will also engage with contemporary issues such as global value chains and the political economy of protectionism. By the end of the course, students should be able to apply formal trade models to real-world policy debates and critically evaluate empirical evidence on the effects of trade liberalisation.
Assessment details
Problem sets (30%) & 2-hour unseen written exam (70%).
Assessment patterns subject to change.
Educational aims & objectives
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Introduce students to classical and new theories of international trade
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Use examples and empirical evidence to introduce students to the methods most commonly used in the economic analysis of international trade.
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Enable students to engage with trade theory in a critical manner, understanding the arguments used both in favour and against trade liberalisation.
Learning outcomes
By the end of the module the students will be able to:
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demonstrate general knowledge and understanding of international trade theory and policy
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understand and manipulate simple economic models, both graphically and analytically
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read and engage critically with the empirical literature on international trade
Teaching pattern
Provisional Lecture Schedule
Week 1. An overview of world trade, gravity, and borders: Chap 2
Week 2. Ricardian model of comparative advantage: Chap 3
Week 3. The specific factors model: Chap 4
Week 4. The Heckscher-Ohlin model: Chap 5
Week 5. Economies of scale and trade: Chap 7
Week 6. Monopolistic competition and trade: Chap 8
Week 7. Firms in the Global Economy: Chap 8
Week 8. Trade policy: Chap 9
Week 9. The political economy of trade policy: Chap 10
Week 10. Trade policy in developing countries: Chap 11
Suggested reading list
Key Reading
All compulsory readings are chapters from: International Economics, Theory and Policy, Paul Krugman, Maurice Obstfeld, Marc J. Melitz., 9th or 10th Edition, Pearson.