Econ 720a. International Trade I

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Tuesday/Thursday 1:15-2:30
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This course will be organized in two parts. The first part will cover the basic theory of international trade, spanning from neoclassical perfect-competition theory where the trade is the result of comparative advantage (Ricardo, Hecksher-Ohlin), to the “New Trade Theory” where trade is generated by imperfect competition and increasing returns to scale. Particular emphasis will be placed on the implications of the different theories concerning the sources of gains from trade and the distributional implications of trade liberalization. The second part will focus on trade policy and international trade agreements. Topics will include: the classical theory of trade policies under perfect competition; the second-best theory of taxation in open economies; strategic trade policies under imperfect competition; political economy models of trade-policy making; the economic and political foundations of trade agreements, particularly the GATT/WTO; and the optimal design of trade agreements as (self-enforcing and incomplete) contracts between governments.

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