AØKA08062U International Trade and Investment: Theory and Policy

Volume 2014/2015
Education
MSc in Economics
Content

The course covers the following topics:

  • Gains from Trade and the Law of Comparative Advantage
  • the Heckscher-Ohlin model focusing on international differences in factor endowments
  • the Ricardian model focusing on international differences in technology
  • the Melitz model focusing on imperfect competition and firm heterogeneity
  • the quality ladder model
  • Trade, offshoring and the structure of wages
  • International migration
  • Gravity models and trade cost
Learning Outcome

The objective of this graduate-level course is to equip students with an in-depth understanding of the theory of international trade and enable them to read, understand and critically reflect on the most recent theoretical and empirical research in the field.

Compared to the undergraduate-level course International Economics, this course is more research-oriented, focusing on the most important research contributions to international trade theory in recent years.

At the end of the course, students are expected to be able to describe the following theories and apply relevant concepts from the course to analyze new problems and policy proposals:

  • Law of comparative advantage
  • Sources of comparative advantage: Factor endowments, technology, quality differentiation and firm heterogeneity
  • Trade, offshoring and labour market implications
  • International migration
  • Trade cost

Required readings

  • Robert Feenstra (2004): Advanced International Trade: Theory and Policy, Chapters 1-5
  • A. Deardorff: “The General Validity of the Law of Comparative Advantage”, JPE, 1980.
  • D. Bernhofen and J. Brown: “An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan”, AER, 2005.
  • P.K. Schott: "One Size Fits All? Heckscher-Ohlin Specialization in Global Production." AER, 2003
  • Dornbusch, R., S. Fischer, et al. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods." AER, 1977.
  • Eaton, J., and S. Kortum. "Technology, Geography and Trade." Econometrica, 2002.
  • Melitz, M. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity." Econometrica 71, 2003.
  • Bernard, A., J. B. Jensen, S. Redding, and P. Schott. “Firms in International Trade”, JEP, 2007.
  • Anderson, James E, and Van Wincoop. "Trade Costs." Journal of Economic Literature, 2004.
  • Grossman, Gene M, and E. Rossi-Hansberg. "Trading Tasks: A Simple Theory of Offshoring." AER, 2008.
  • Hummels, Jørgensen, et al."The Wage and Employment Effects of Offshoring: Evidence from Danish Matched Worker Firm Data." AER, 2014.
  • Amiti, M. and D. Davis: “Firm Trade and Wages: Theory and Evidence”, NBER 14106
  • Autor, Dorn and Hanson: “The China Syndrome: The Impact of Import Competition on Local Labor Markets in the US”, AER.
  • Hanson: “The Economic Consequences of the International Migration of Labor”, Annual Review of Economics.
  • Additional readings will announced at the start of the semester
Mandatory courses from B.Sc.
3 hours of lectures per week for 14 weeks.
  • Category
  • Hours
  • Exam
  • 3
  • Lectures
  • 42
  • Preparation
  • 161
  • Total
  • 206
Credit
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
Written closed-book examination takes place at Peter Bangs Vej 36
Aid
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
100 % censurship
Exam period
Will be updated before the start of the semester
Re-exam
Same as ordinary. But if only a few students have registered for the re-exam, the exam might change to an oral exams with a synopsis to be handed in. This means that the examination date also will change.
Criteria for exam assesment

The Student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.