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ECO2008 : International Economics

  • Offered for Year: 2019/20
  • Module Leader(s): Dr Hugh Metcalf
  • Owning School: Newcastle University Business School
  • Teaching Location: Newcastle City Campus
Semester 1 Credit Value: 10
ECTS Credits: 5.0


The module should provide an understanding of:
1. The determinants of international trade, including the implications of imperfect competition
in international markets;
2. The cases when a protectionist policy towards international trade may be appropriate;
3. The fundamental determinants of the balance of payments and exchange rates;
4. Alternative exchange rate arrangements and international policy co-ordination.

The aim of the module is to familiarise students with issues and models that underpin international trade theory and the determination of exchange rates. In the first half of the module, simple models will be developed that focus on key issues that help explain the existence of trade, such as comparative advantage and resource availability; consideration will also be given to the implications of the use of policy instruments, such as quotas, tariffs or subsidies. The second half of the module considers flexible and sticky price models of exchange rate determination in a world of either fixed or floating exchange rates. The responses of the economy to policy initiatives differ in these alternatives paradigms and these will be considered together with the issue of currency crises and optimal currency areas.

Outline Of Syllabus

Lecture 1 – Introduction to International Trade Theory and Trade Organisations. The Ricardian Model.
Lecture 2 – The Specific Factors Model
Lecture 3 and 4 – The Heckscher-Ohlin Model
Lecture 5 – The Standard Trade Model
Lecture 6 – Imperfect Competition and Modern Trade Theory
Lecture 7 – Tariffs, Subsidies and Quotas and Welfare
Lecture 8 – Exchange Rates, National Income Accounting and the Balance of Payments
Lecture 9 – An Asset perspective on Exchange Rate determination
Lecture 10 – The Flexible Price Model
Lecture 11 – The Sticky Price Model
Lecture 12 – Fixed and Floating Exchange Rate regimes
Lecture 13 – Managed Floats, currency crises and policy issues
Lecture 14 – Optimum Currency Areas
lecture 15 - review

Teaching Methods

Teaching Activities
Category Activity Number Length Student Hours Comment
Guided Independent StudyAssessment preparation and completion132:0032:00N/A
Scheduled Learning And Teaching ActivitiesLecture151:0015:00N/A
Guided Independent StudyDirected research and reading125:0025:00N/A
Scheduled Learning And Teaching ActivitiesSmall group teaching31:003:00N/A
Guided Independent StudyIndependent study125:0025:00N/A
Teaching Rationale And Relationship

* lectures provide an overview of the main topics and their treatment in the current literature.
* seminars provide students with an opportunity to reinforce learning and monitoring progress by solving problems related to the issues raised in the lectures.

Assessment Methods

The format of resits will be determined by the Board of Examiners

Description Length Semester When Set Percentage Comment
Written Examination1201A100N/A
Formative Assessments
Description Semester When Set Comment
Prob solv exercises1MPractice questions are available
Assessment Rationale And Relationship

The unseen exam is designed to encourage study and test knowledge over the full-range of subject areas.

Reading Lists