Aims

The module focuses on theories of international trade. It covers the Ricardian and Heckscher-Ohlin models in detail, and also examines more recent trade theories such as imperfect competition and returns to scale. Attention will also be devoted to trade policy. The last sessions will use models of frictional labour markets to analyse the relationship between the international trade and labour markets and related empirical evidence.

The objective of the module is to familiarise students with the tools and basic concepts required to understand the forces that shape international trade and help determine trade policies. At the end of the module, the students should be able to make sense of discussions of international trade in the business press and to express their own opinion. The module also helps the student understand that economic policy must consider the significant interaction between different sectors of the economy, particular emphasis being put on the labor market. A final objective of the module is to further the students' understanding of the role of economic modelling. In particular, trade theory is a good illustration of how different models can (and must) be used to analyse a given economic issue.

The module offers a variety of academic skills and promotes external awareness. With regard to academic skills, the module encourages analytical reasoning, critical evaluation, and the ability to use and interpret mathematical relations. By doing so, it provides students with the economic background to debate world trade related issues. Indeed, discussions of real world applications promote external awareness among the students.

Outline Of Syllabus

1. The Theory of International Trade. Differences in Technology. The Hecksher-Ohlin Model. The Specific Factor Model, Imperfect Competition as Determinant of Trade, Increasing Returns to Scale.
2. International Trade Policy: Tariffs, Quotas and Non Tariff Barriers, Imperfect Competition and Trade Policy. The Political Economy of Trade Policy.
3. International Trade and the labour markets: Theory and evidence with frictional labour markets.
4. The effects of growth with international trade.

Teaching Rationale And Relationship

Lectures provide an exhaustive and in-depth introduction to the core course material, and introduction to required techniques. Seminars are used to take students through applications and extensions to lecture material and study cases. Private study facilitates review and understanding of lecture material.

Assessment Rationale And Relationship

Students should be able to show their knowledge and understanding of topics covered.