International Trade. Course Description and Requirements

Transcription

1 Summer semester 2014 International Trade Course Description and Requirements This is a PhD course for graduate students from the Duesseldorf Institute for Competition Economics (DICE) and the Ruhr Graduate School of Economics (RGS Econ). The course will be held at DICE Duesseldorf and takes four full days. Grading for this course is based on two separate assignments: 1. Written (closed book) exam (70%) The exam will be organized shortly after the last lecture (details follow) and covers the material that has been discussed in the classroom. 2. Referee report (30%) You are required to write a short referee report of about 3-4 pages on one of the papers from the reading list which are indicated with a R. In the report, you should briefly summarize the main features of the paper and its contribution relative to the literature that was discussed during the class. You should discuss the strengths and weaknesses of the paper, possibly relating to other papers in the field, and you should make suggestions on how to improve it. The referee report is due on May 1, For training purposes, there will also be problem sets with exemplary exam questions and further questions. Students can discuss their solutions with the teaching assistant. Handouts, problem sets and (most of) the required literature is made available electronically on a course website (web address TBA). Important updates and news are also posted there. Instructors Professor Dr Jens Südekum DICE Heinrich-Heine-University Düsseldorf suedekum@dice.hhu.de Prof. Dr. Tobias Seidel Mercator School of Management University of Duisburg-Essen tobias.seidel@uni-due.de Teaching assistant Verena Nowak, M.Sc., DICE, Heinrich-Heine-University Düsseldorf verena.nowak@uni-due.de

2 Course Outline Day 1 Thursday, March 27. 9:00-16:00, Room S2 (Südekum) Trade with monopolistic competition and the New Economic Geography The Dixit-Stiglitz model of monopolistic competition and the new trade theory (NTT) Gains in consumption variety and pro-competitive gains from trade, Market potential and the home market effect Endogenous market size effects and agglomeration: the core-periphery model Agglomeration and welfare Combes, Mayer and Thisse (2008), chapters 3-8 Fujita, Krugman and Venables (1999), ch. 4-5 New trade theory: Krugman (1979), Krugman (1980) New economic geography: Krugman (1991), Forslid and Ottaviano (2003) Pflüger and Südekum (2008) Day 2 Friday, March 28. 9:00-16:00, Room S2 (Südekum) Heterogeneous firms and international trade: Basic models Firm heterogeneity and international trade: Empirical background Self-selection into export markets; trade integration and selection Welfare gains from trade Empirical background: Bernard, Jensen, Redding and Schott (2007, 2011) Basic models: Melitz (2003) Melitz and Ottaviano (2008) Arkolakis, Costinot and Rodriguez-Clare (2012) Behrens, Murata, Mion and Südekum (2014)

3 Day 3 Friday, April 4. 9:00-16:00, Room S2 (Südekum) Foreign direct investment and multinational firms Horizontal foreign direct investment vs. exports; the proximity-concentration tradeoff Trade in intermediate inputs The organization of multinational firms Helpman (2006) Helpman, Melitz, Yeaple (2003) Grossman and Rossi-Hansberg (2008) Antras and Helpman (2004) Day 4 Friday, April 11. 9:00-16:00, Room S2 (Seidel) International trade: Empirics A brief repetition of empirical methods (if necessary) Outsourcing vs. technological change: What drives wage inequality? The gravity equation: Anderson and van Wincoop (2003) Eaton and Kortum (2002) Anderson / van Wincoup (2004) Eaton and Kortum (2002) Feenstra (2004): Advanced International Trade, Chapters 4 & 5; Feenstra (2008): The Ohlin Lectures (available online); Papers mentioned in the lecture slides;

4 Literature Textbooks Combes, P., T. Mayer and J. Thisse (2008), Economic Geography, Princeton University Press Feenstra, R. (2003), Advanced international trade, Princeton University Press Fujita, M., P.Krugman and A. Venables (1999), The spatial economy. Cities, regions, and international trade. Cambridge (Mass.): MIT Press. Helpman, E. and P. Krugman (1985), Market Structure and Foreign Trade. Cambridge (Mass.): MIT Press. Required readings Anderson, J. and E. van Wincoop (2003), Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, vol. 93(1), pp Antràs P. and E. Helpman, (2004), Global Sourcing, Journal of Political Economy 113, Arkolakis, C., A. Costinot and A. Rodriguez-Clare (2011), New Theories, Same Old Gains?", American Economic Review, vol. 102(1), Behrens, K., G. Mion, Y. Murata, J. Südekum (2014), Trade, Wages, and Productivity, International Economic Review (forthcoming). Bernard, A., B. Jensen, S. Redding and P. Schott (2007), "Firms in international trade", Journal of Economic Perspectives 21: Bernard, A., B. Jensen, S. Redding and P. Schott (2011), The empirics of firm heterogeneity and international trade, NBER Working Paper Eaton, J. and S. Kortum (2002), Technology, geography, and trade, Econometrica 70, Forslid, R. and G.Ottaviano (2003), An analytically solvable core-periphery model, Journal of Economic Geography 3: Grossman, G. M. and E. Rossi-Hansberg (2008), Trading Tasks: A Simple Theory of Offshoring," American Economic Review, vol. 98(5), pp

5 Helpman, E. (2006), "Trade, FDI, and the organization of firms", Journal of Economic Literature 44: Helpman E., Melitz M.J. and S.R. Yeaple, (2004), Export versus FDI with Heterogeneous Firms, American Economic Review 94:1, pp Krugman, P. (1979), "Increasing returns, monopolistic competition, and international trade", Journal of International Economics 9: Krugman, P. (1980), Scale economies, product differentiation and the pattern of trade, American Economic Review 70: Krugman, P. (1991), Increasing returns and economic geography, Journal of Political Economy 99: Melitz, M. (2003), The impact of trade on intra-industry reallocations and aggregate industry productivity, Econometrica 71: Melitz, M. and G. Ottaviano (2008), Market size, trade, and productivity, Review of Economic Studies 75, Pflüger, M. and J. Südekum (2008), Integration, agglomeration, and welfare, Journal of Urban Economics 63: Further readings and papers for referee reports Acemoglu, D., Antràs, P., Helpman, E. (2007), Contracts and technology adaption, American Economic Review 1260 Rev. 97 (3), Antràs P. and D. Chor, (2013), Organizating the global value chain, Econometrica 81 (6), Antràs, P., M. Desai, and F. Foley (2009), Multinational Firms, FDI Flows and Imperfect Capital Markets," Quarterly Journal of Economics, 124(3), Behrens, K., A. Lamorghese, G. Ottaviano and T. Tabuchi (2007), Testing the home market effect in a multi-country world, CORE Discussion Paper 2005/55. Revised version published in Journal of International Economics Broda, C. and D. Weinstein (2006), Globalization and the Gains from Variety," Quarterly Journal of Economics, vol. 121(2),

6 Chaney, T. (2008), Distorted Gravity: Heterogeneous Firms, Market Structure and the Geography of International Trade," American Economic Review, 98(4), Eckel, C. and P. Neary (2009), Multi-Product Firms and Flexible Manufacturing in the Global Economy," Review of Economic Studies, vol. 77(1), Egger, H. and U. Kreickemeier (2009), Firm Heterogeneity and the Labour Market Effects of Trade Liberalization," International Economic Review, 50(1), Fajgelbaum, P., G. Grossman and E. Helpman (2009), Income Distribution, Product Quality, and International Trade", Journal of Political Economy, 119(4), Helpman, E.,O. Itskhoki and S. Redding (2010), Inequality and Unemployment in a Global Economy", Econometrica, 78(4), Hummels, D. and P. J. Klenow (2005), The Variety and Quality of a Nation's Exports," American Economic Review, vol. 95, Markusen, J. and A. Venables (2000), The Theory of Endowment, Intra-industry and Multi-national Trade," Journal of International Economics, vol. 52, Mayer, T., M. J. Melitz and G. Ottaviano (2014), Market Size, Competition, and the Product Mix of Exporters," American Economic Review (forthcoming) Pflüger, M. and J. Südekum (2013), Subsidizing entry in open economies, Journal of Public Economics 97,