The International Economics
Study Center


 

GWU Econ 180
Survey of International Economics
Course Syllabus

Fall 2007

This course is a survey international trade and international finance theory and policy. It will consist of half the material from an international trade course (Econ 181) and half the material from an international finance class (Econ 182). Students should be comfortable with graphical techniques and the basics of Micro and Macro economics.
 

Professor: Steve Suranovic

Time & Location:
        Sept 5 - Dec 10, 2007

        Mon 12:45 - 2 pm, Hall of GOV 102

Office (for Office Hours only): GOV 323
Main Office: 1957 E St, Room 501M

Office Hours: Mondays, 2 - 5 pm and by appt. in GOV 323
Office Phone: 994-7579
E-mail: smsuran@gwu.edu

Evaluation
4 Quizzes
10% each
1 Midterm Exam
30%
1 Final Exam
30%

 

Exam Schedule
Quiz #1
Sept 24
Quiz #2
Oct 10
Midterm Exam
Oct 24
Quiz #3
Nov 19
Quiz #4
Dec 5
Final Exam
Dec 17

Note: Makeup quizzes or exams will be considered only for emergencies or conflicts outside the student's control and only with prior instructor approval.

  Course Outline
Sept 5 - 12 Introduction to International Economics, Trade History, Trade Law and the WTO
In the first session we explore the topics and issues of international economics, both trade and finance. We will review highlights from history, describe notable current trade laws, and introduce the WTO.

Readings:

Introduction to International Finance

Chapter 5 - Introductory Issues
Sections 5-1 to 5-5F
(Note: There is no need to follow the links in this chapter)

Chapter 10 - Trade Policy Tools
Sections 10-0 to 10-7

Chapter 20 - Trade History and Trade Law
Sections 20-0 to 20-4

Supplementary Readings:

Think Again: International Trade
Article by Arvind Panagariya that highlights some important regularities about international trade.

Trade Policy Review: US (2006)
This is an overview of US trade policies conducted by the WTO.

US Tariff Schedule
Click here to find the most recent tariff schedule for all goods in the US. CLICK on these links for the tariffs schedules for vegetables and watches.

The WTO Agreements
A description of some of the details behind WTO rules on antidumping measures, subsidies and countervailing measures and safeguards.

Understanding US Antidumping & Countervailing Duty Investigations - Summary of Antidumping and Countervailing Duty Procedures from the US Intl. Trade Commission website.

Practice Problems:

Week of

Sept 17

Competition, Efficiency and the Lessons of Comparative Advantage

This session we will discuss the Ricardian theory of comparative advantage, the gains from trade, and the workings of a competitive international market.

Readings:

Practice Problems:

Week of

Sept 24

Gains from Trade, Income Redistributions with Immobile Factors and Heckscher-Ohlin

This session will begin with an explanation of the most basic gains from trade and follow with a discussion reasons why trade can produce winners and losers. Along the way we'll describe the immobile factor and the Heckscher-Ohlin models.

Readings:

Chapter 30 - A Pure Exchange Model of Trade
Read sections 30-1 to 30-5

Chapter 60 - The Heckscher-Ohlin (Factor-Proportions) Model
Read sections 60-0

Chapter 70 - Factor Mobility and Trade
Read sections 70-0 to 70-2, and 70-30

Schumpeter's Creative Destruction
This is an except from Capitalism, Socialism and Democracy (1942) describing the process of creative destruction

Economic Turbulence

More on Economic Churning

When Labor Loses Out to Trade
by Gustav Ranis and David Corderi, YaleGlobal, 10 August 2006

Practice Problems:

Weeks of

Oct 1 - 8

The Effects of Trade Policies: Tariffs and Retaliation

This session will demonstrate the price and welfare effects of a tariff, quotas and export subsidies in large and small country cases. We will also consider simple examples of trade wars and use insights from this to help understand the motivations for the WTO.

Readings:

Practice Problems:

Week of

Oct 15

More about Trade Policies: Export Subsidies and Political Economy
Trade policy analysis is continued with a look at export subsidies. The similarities between the policies are noted. We will also consider the interaction between the economics and the politics of trade policy.

Readings:

Chapter 90 - Trade Policy Effects
Read sections 90-26, 90-27

Chapter 105 - Political Economy and International Trade
Read sections 105-0 to 105-7

Supplementary Readings:

Practice Problems:

Week of

Oct 22

Market Imperfections and Distortions, Evaluating the Controversy

This session will discuss market imperfections and distortions such as unemployment, infant industries and environmental concerns. This will raise some questions concerning the appropriateness of free trade. However, we will also consider counterarguments and conclude with the modern argument supporting free trade.

Readings:

Supplementary Readings:

The Fruits of Free Trade
A report about the advantages of free trade put out by the Dallas Federal Reserve Bank. A Great supplementary reading!!

Domestic Support Policies
A briefing paper by the Economic Research Service at the US Dept. of Agriculture

Week of

Oct 29

Introduction to International Finance Issues and the National Income Accounts

This session begins with an overview of recent and historical policy issues in international finance including exchange rate systems, FDI, the role of the IMF, currency crises and the growing importance of China. Next we'll do a brief review of national income accounts and discuss the significance of GDP.

 

Readings:

Supplementary Readings:

US National Income and Product Accounts (NIPA)
the most recent US data is available here from the US Bureau of Economic Analysis. To access the data in non-HTML formats search on this page.

Practice Problems:

Week of

Nov 5

The Balance of Payments Accounts and the Twin-Deficit Identity

This session defines the balance of payments accounts and establishes the interconnection between the current account and the financial account. We also discuss the twin-deficit identity and a country's international investment position.

Readings:

Supplementary Readings:

US International Accounts Data
the most recent US data from the US balance of payments accounts including the US international investment position available here from the US Bureau of Economic Analysis.

Practice Problems:

Week of

Nov 12

Evaluation of Trade Imbalances
This session dispels the popular notion that trade deficits are "bad" and trade surpluses are "good". The material highlights the intertemporal borrowing and lending associated with trade imbalances and notes situations in which each of these could be appropriate (or inappropriate) for both individuals and for nations. Key factors needed to determine the seriousness of a trade imbalance are discussed and a case study for the US is presented.

Readings:

Supplementary Readings:

How to Evaluate Trade Imbalances
article that discusses conditions when trade imbalances may be either problematic or non-problematic.

A Multi-Country Evaluation of Trade Imbalances: China
an article by GW-Elliott School MA students which evaluates the trade imbalance experience of the United States.

A Multi-Country Evaluation of Trade Imbalances: The United States
an article by GW-Elliott School MA students which evaluates the trade imbalance experience of the United States.

America's Maligned and Misunderstood Trade Deficit
an article by Daniel Griswold at the Cato Institute offers some reasons why the US trade deficit is not a cause for great concern. Note especially the graph showing the relationship between the US trade deficit and the unemployment rate.

Practice Problems:

Weeks of

Nov 19 - 26

Exchange Rates, Interest Rates and Interest Parity
This session highlights the linkage between the exchange rate, and interest rates through the interest rate parity condition. It is shown how changes in economic variables can affect differential rates of returns which in turn can affect the value of the exchange rate.

Readings:

Practice Problems:

Week of Dec 3 Purchasing Power Parity
This session presents the theory of purchasing power parity. The logic of the theory as an explanation for exchange rate movements is provided. More importantly, the supplemental readings help teach the way PPP exchange rates are used to make international comparisons of economic data.

Readings:

Chapter 30 - Purchasing Power Parity
Sections 30-1 and 30-3 to 30-7

Supplementary Readings:

PPP FAQ
an excellent summary from the OECD.

The Economist's Big Mac Index
this 1999 article evaluates PPP based on Big Mac price comparisons across countries. The latest index appeared in the April 29, 2000 issue of the Economist.

Comparative Price Levels for OECD countries -December 2003
these numbers are the same as the real exchange rates.

Video: Economist's Big Mac Index
this video clip explains PPP by comparing Big Mac prices around the world.

Lattenomics from the Economist
a new theory percolating through FOREX markets.

Practice Problems:

Week of Dec 10 Fixed vs. Floating Exchange Rates
This session presents a brief overview of the differences between fixed and floating exchange rates.

Readings:

Supplementary Readings:

Fixed or Flexible? Getting the Exchange Rate Right in the 1990s
A 1998 article by Francesco Caramazza and Jahangir Aziz from the IMF describing the differences between fixed and floating exchange rates.
Fixed vs. Floating Exchange Rates
An article by Peter Kenen that provides a few of the arguments for and against fixed exchange rates.

Practice Problems:

 

 

 

 

Final Exam

Monday, December 17

12:40 - 2:40pm

GOV 102

 


Last Updated on 11/3/07