Vorlesung, SWS:2, VL Number: 33540
It is the main purpose of this course to make students at the master level familiar with models in the traditional and new trade theory with a strong analytical focus. In the first part the course provides a rigorous analysis of the theoretical microeconomic concepts required for developing trade theory. These concepts include factor endowments, production functions and production frontiers, returns to scale on the supply side, and utility and preference aggregation on the demand side. From these models we develop the notion of general equilibrium with and without trade, which allows considering aspects of the gains from trade and how they are distributed. In part 2 we go on to develop specific theories of why countries trade with one another by considering first the major traditional theories, including relative differences in labor productivity, the interaction of factor endowments and production functions, and short-run factor specificity. Part 3 will introduce models from the new trade theory, including oligopolistic and monopolistic competition. Part 4 will give an introduction to the “new new” trade theory by discussing the Melitz (2003) framework.
The course is taught in English. Also the exam will be posed in English.
Table of Contents
Part 1: A two-sector model of trade
- The 2x2 production model
- Preferences and aggregate demand
- General equilibrium
- Trade in a two country model
- Gains from trade
Part 2: Traditional trade theories
Part 3: New trade theory
- Oligopolistic Competition
- Monopolistic Competition (homogenous firms)
Part 4: New New trade theory
- Monopolistic Competition (heterogeneous firms)
Lecture Notes for this course can be downloaded from the E-Learning server.
Markusen, J.R., Melvin, J.R., Kaempfer, W.H., Maskus, K. E. (1995), International Trade, McGraw-Hill International Editions. http://spot.colorado.edu/~markusen/textbook.html
van Marrewijk, C. (2007), International Economics: Theory, Application, and Policy, Oxford University Press.
Feenstra, R.C. (2016), Advanced International Trade: Theory and Evidence, 2nd Edition, Princeton University Press.
Brander, J. and P. Krugman (1983) A ‘reciprocal dumping’ model of international trade, Journal of International Economics 15, 313-321.
Krugman, P. (1980) Scale economies, product differentiation and the pattern of trade, American Economic Review 70, 950-959.
Melitz, M. (2003) The impact of trade on intra-industry reallocations and aggregate industry productivity, Econometrica 71, 1695-1726.
Eaton, J., and Kortum, S. (2002). Technology, Geography, and Trade. Econometrica, 70(5), 1741-1779.
An exercise course will support students in handling the different modeling approaches. It is strongly recommended to attend this exercise course in order to pass the exam.
Grading of the course is based on active participation and a written exam (1h) at the end of the term. If the number of participating students is less than 5, an oral examination may replace the written one. (Students will be informed about the form of examination as soon as possible.)
Registration (and deregistration) for the final exam takes place via the Campus Online system. Campus Online also provides information on current registration periods, time and place of exams.
Übung, SWS:1, VL Number: 33541
The exercise course is closely linked to the lecture and supports the students in handling the different modeling approaches. The corresponding exercises will be provided on the e-learning server of the University of Bayreuth. It might be useful to prepare the exercises in advance to the course. It is strongly recommended to attend this course as well as the lecture for passing the exam successfully.
Please note there is no strict cutoff between the lecture and exercise course with respect to the time. Especially in the first weeks I will give a lecture in the afternoon. I will announce in class when we will discuss the respective problem set (usually after we have finished a chapter from the lecture course).