International Trade and Investment
Economics
8413-001
Fall
2008 Tuesday & Thursday 2:00 – 3:15 in Econ 5.
Professor Wolfgang Keller, email Wolfgang.Keller@colorado.edu,
Econ 206, Tu 3:30 – 5:00 and by appointment
Course
Outline and Reading List
Overview
Economics 8413 is a course on the real side
of International Economics designed for Ph.D. students in the Economics
Department. We will strive to achieve a
balance between theory, empirics, and current work on international trade and
investment.
This course presumes knowledge of the
first-year graduate sequences in microeonomics,
macroeconomics, and econometrics. Students from other departments are welcome
subject to instructor’s approval.
Requirements
1. Preparation of a one-page summary for each
required paper, and be prepared to participate in class discussions. Students
may be asked to summarize a paper and give comments. Paper summaries and
overall class participation are 10% in the course grade
2. One referee report on a current paper (20%)
3. Presentation of a current research paper (20%)
4. A
research paper, due on final’s day (50%)
The research paper may be theoretical or empirical
in nature. We will discuss the paper requirements in the second week of
class. I will supply the paper(s) to be
refereed and provide instructions (point 2). Your presentation can be on a
paper of your choice, subject to my approval (point 3). The best strategy is to
pick a paper for presentation that is related to your research interests,
leading to your research paper. Attendance at the International/Development
seminars is required.
The textbook for
this class is
Feenstra, Robert, Advanced
International Trade: Theory and Evidence,
Other books that we
to some extent rely on or that may be useful include the following:
Dixit, A., and V. Norman, 1980, Theory of International Trade,
Helpman, E., and P. Krugman,
1985, Market Structure and Foreign Trade, MIT Press 1985.
Grossman,
G., and
Grossman,
G., and K. Rogoff (eds.), 1995, Handbook of
International Economics, Vol.3, North-
Jones,
R., and P. Kenen (eds.), 1984, Handbook of
International Economics, Vol.1, North-
Fujita, M., P. Krugman, and A. Venables 1999, The Spatial Economy,
MIT Press.
Reading
List Outline
This list will be updated as appropriate
Papers in each section are covered in varying
detail. Background readings are indicated by (B).
1. Comparative Advantage and the Gains from
Trade
Deardorff, A., "The General Validity of the Law of Comparative Advantage", JPE 1980.
Bernhofen, D., and J. Brown, "A Direct Test of the Theory of Comparative Advantage”, JPE 2004.
(B) Dixit and Norman, Chapters 1-3.
2. The Ricardian Trade Model
Dornbusch, R., S. Fischer, and P. Samuelson, "Comparative Advantage, Trade and Payments in a Ricardian Model with a Continuum of Goods", AER 1977.
Eaton, J., and S. Kortum, "Technology, Geography, and Trade”, Eca 2002.
Feenstra pp.1-4
3. Factor Endowment
Models
Jones, R., "The Structure of Simple General Equilibrium Models", JPE 1965.
Dornbusch, R., S. Fischer, and P. Samuelson, “Heckscher-Ohlin
Trade Theory with a Continuum of Goods, QJE 1980.
Feenstra, Chapters 1-3
Dixit and Norman, Chapter 4
Helpman and Krugman, Chapter 1
(B) Ethier, W., "Higher Dimensional Issues in Trade Theory", Jones and Kenen (eds.), Handbook of International Economics V.1, chapter 3.
Trefler, D., "The Case of the Missing Trade and Other HOV Mysteries", AER 1995.
Choi, Y-S, and P. Krishna, “The Factor Content of Bilateral Trade: An Empirical Test”, JPE 2004.
(B) Helpman, E., "The Structure of Foreign Trade", NBER WP.
(B) Leamer, E., and J. Levinsohn, "International Trade Theory: The Evidence", Grossman and Rogoff (eds.), Handbook of International Economics V.3, chapter 26.
4. Scale Economies,
Product Differentiation, and the Gravity Equation
Krugman, P., "Increasing Returns, Monopolistic Competition, and International Trade", JIE 1979.
Krugman, P., "Scale Economies, Product Differentiation and the Pattern of Trade", AER 1980.
Ethier, W., "National and International Returns to Scale in the Modern Theory of International Trade", AER 1982.
Antweiler, W., and D. Trefler, "Increasing Returns and all That: A View from Trade", AER 2002.
Evenett, S., and W. Keller, "On Theories Explaining the Success of the Gravity Equation", JPE 2002.
Hummels, D. and P. Klenow, “The Variety and Quality of a Nation’s Trade”, AER 2005.
Weinstein, D., and C. Broda, “Globalization and the Gains from Variety”, QJE 2006.
Anderson, James, and Eric Van Wincoop. “Gravity with Gravitas.” AER 2003.
Schott, P., “Do Rich and Poor Countries Specialize in a
Different Mix of Goods? Evidence from Product-Level
Helpman and Krugman, Chapters 6-8.
Feenstra, Chapter 5.
5. Transport Costs,
Borders, and Geography
Krugman, P., "Scale Economies, Product Differentiation and the Pattern of Trade", AER 1980.
Anderson, J., and E. van Wincoop, “Gravity with Gravitas: A Solution to the Border Puzzle”, AER 2003.
Trefler, D., “The Long and the Short of the Canada-U.S. Free Trade Agreement”, AER 2004.
Keller, W., and C. Shiue, “Tariffs, Trains, and Trade: The Role of Institutions versus Technology in Market Expansion”, NBER # 13913
Krugman, P., and A. Venables, "Globalization and the Inequality of Nations", QJE 1995.
Krugman, P., “Increasing Returns and Economic Geography”, JPE 1991.
6. Firm Heterogeneity
Melitz, M., “The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity”, Eca 2003.
Yeaple, S., “A Simple Model of Firm Heterogeneity, International Trade, and Wages”, JIE 2005.
Melitz, M., and G. Ottaviano, “Market Size, Trade, and Productivity”, ReStud 2008
Chaney, T., “Distorted
Gravity: Heterogeneous Firms, Market Structure and the Geography of
International Trade”, forthcoming, AER
Helpman, E., M. J. Melitz, and Y. Rubinstein, 2007, “Estimating Trade Flows: Trading Partners and Trading Volumes,”,
forthcoming, QJE
Bernard, A., J. Eaton, B. Jensen, and
Bernard, A.,
Roberts, M., and J. Tybout, “The
Decision to Export in
Hanson, G., and C. Xiang, 2008, “Testing the Melitz Model of Trade: An Application to US Motion Picture Exports”, working paper.
Eaton, J., S. Kortum, and F. Kramerz, “Dissecting Trade: Firms, Industries, and Export Destinations”, NBER # 10344
(B) Helpman, E., “Trade, FDI, and the Organization of the Firm”, JEL 2006.
(B) Bernard, A., B. Jensen,
7. Trade, Growth, and
International Technology Diffusion
Grossman and Helpman, Chapter 6.
Howitt, P. “Endogenous Growth and Cross-Country Income Differences”, AER 2000.
Keller, W., « Geographic Localization of International Technology Diffusion » AER 2002.
Klenow, P, and A. Rodriguez-Clare, « Externalites and Growth », Handbook of Economic Growth (eds. Aghion/Durlauf).
Acharya, R., and W. Keller, “Estimating the Productivity Selection and Technology Spillovers Effects from Imports”, NBER # 14079.
Feenstra, Chapter
10.
(B) Keller, W.,
“International Technology Diffusion”, JEL 2004.
8. Multinational Enterprises,
Offshoring, and Outsourcing
Helpman, E., "A Simple Theory of Trade with Multinational Corporations", JPE 1984.
Carr, J. Markusen, and K. Maskus, "Estimating the Knowledge-Capital Model of the
Multinational
Brainard, S., "An Empirical Assessment of the Proximity-Concentration Trade-off Between Multinational Sales and Trade", AER 1997.
Helpman, E., M. Melitz, and S. Yeaple, “Exports versus FDI with Heterogeneous Firms”, AER 2004.
Rauch, J., and V. Trindade, “Information, Substitutability, and Globalization”, AER 2003.
Antras, P., “Trade, Contracts, and Trade Structure”, QJE 2003.
Antras, P., and
Grossman, G., and E. Rossi-Hansberg, “Trading Tasks: A Simple Theory of Offshoring”, AER, forthcoming
Hanson, G., and R. Feenstra,
"Ownership and Control in Outsourcing to
Nunn, N. and D. Trefler, “Incomplete Contracts and the Boundaries of the Multinational Firm”, 2008.
Keller, W., and S. Yeaple,
“Multinational Enterprises, International Trade, and Productivity Growth:
Firm-Level Evidence from the
Helpman and Krugman, Chapters 12 and 13.
Feenstra, Chapter 11.
(B) Helpman, E., “Trade, FDI, and the Organization of the Firm”, JEL 2006.
(B) Markusen, J., Multinationals and the Theory of International Trade, MIT Press 2002.
(B) Blonigen, B., “A Review of the Empirical Literature on FDI Determinants”, NBER # 11299.
9. Trade Policy
Feenstra, chapters 7-8.
Romer, P., "New Goods, Old Theory, and the Welfare Costs of Trade Restrictions", JDE 1994.
Feenstra, R. 1988.
Quality Change under Trade Restraints in Japanese Autos. QJE 103:
131-146.
Levinsohn, J. 1993. Testing the Imports as Market Discipline Hypothesis. JIE 35:
1-22.
Koujianou, P. 1995.
Product Differentiation and Oligopoly in International Markets: The Case of the
Grossman, G., and E. Helpman,
"Protection for
Maggi, G., "Strategic Trade Policies with Endogenous Mode of Competition", AER 1996.
General equilibrium tariff analysis, Chapter 13 in Bhagwati, J., and T.N. Srinivasan, Lectures on International Trade, MIT Press, 1983.
Dixit and Norman, Chapter 5 (pp.149-163), chapter 6.
(B) Staiger, R., "International Rules and Institutions for Trade Policy", Grossman and Rogoff (eds.), Handbook of International Economics V.3, chapter 29
(B) Rodrik, D., "Political Economy of Trade Policy", Grossman and Rogoff (eds.), Handbook of International Economics V.3, chapter 28.
(B) Feenstra,
R., "Estimating the Effects of Trade Policy", Grossman and Rogoff (eds.), Handbook of International Economics V.3.
(B) Corden, M.
1984. “The Normative Theory of
International Trade”,
in Jones and Kenen, eds., Handbook
of International Economics, Vol. 1, North-Holland.