Economics 140, Spring 2021: International Trade

Professor        Gueyon Kim

Office Hours (via Zoom): Wednesdays 10 am -12 pm, Zoom Meeting ID: 367-967-1410

Email: [email protected] (Please put [Econ 140] in the subject line)

Teaching Assistant        Pedro Henrique Braz Vallocci

Office Hours (via Zoom): Mondays 3 pm – 5 pm, Zoom Meeting ID: 967 8408 8531

Email: [email protected]

Lectures        Pre-recorded lectures available on Canvas

                     Tuesdays and Thursdays 11:40 am – 1:15 pm, Q&A in real-time via Zoom

                     Zoom Meeting ID: 947-5075-3100

Webpage       UCSC Canvas (canvas.ucsc.edu)

Course Description

This course examines the causes and consequences of international trade. We will study the basic trade models, discuss their practical relevance, and apply them to discuss past and current events in the world economy, which provide critical interest to policy makers, business leaders as well as the general public.

Course Prerequisites

Econ 100A or Econ 100M is a prerequisite as we will be using tools and models in microeconomics in this class. The class material also assumes that you are familiar with basic algebra and calculus.

Grading Policy

Grades will be based on quizzes (16%), problem sets (24%), and three exams (midterm 30% (15% each), final 30%).

• In each lecture, a simple pop quiz may be given.

• Four problem sets will be distributed across the quarter, of which only your best three scores will contribute to the final grade.

• I do not offer alternative exam dates nor make-up exams. If you miss a midterm, you have the option to shift its weight to the final, thereby making the final exam worth up to 60% of your grade. If you miss the final exam, the only option is to take an incomplete until you take the final exam for Econ 140 in the future.

Midterm Exam 1: April 15, 11:40 am – 1:15 pm

Midterm Exam 2: May 6, 11:40 am – 1:15 pm

Final Exam: June 8, 12:00 pm – 3:00 pm

• Any student caught cheating will fail the course and suffer whatever non-academic punishment the University deems appropriate. (https://ue.ucsc.edu/academic-misconduct.html) 

Recommended Text

Paul Krugman, Maurice Obstfeld, and Marc Melitz, International Trade: Theory and Policy, Pearson

Note: The textbook is recommended. Other editions of the book will contain very similar material but the syllabus below lists page references for the 11th edition. Recommended readings in the textbook are abbreviated as “K-O-M” below in the course outline.

• E-books can be purchased at the bookstore.

• Rental versions of the hard copies are available: here: http://www.mypearsonstore.com/bookstore/international-trade-theory-and-policy-rental-edition-0134519558

Frequently Asked Questions

1. [General] Where can I find class materials?

All class materials including lecture notes, problem sets, practice exams, recommended articles as well as solution to problem sets, practice exams, quizzes, and exams will be posted on Canvas.

2. [Lectures] When will lecture notes be posted?

In general, I will aim to upload the lecture notes on Canvas the day before each lecture.

3. [Problem Sets] Can I work on the problem sets together with my friends?

Absolutely. The problem sets are intended to be learning experiences and working as a group to solve the questions is in fact encouraged. However, you must submit your own problem set solutions, which reflect your understanding of the problem.

4. [Problem Sets] How are the problem sets graded?

Each problem set is worth 40 points. It will be graded based on submission time, effort, and completeness.

• For late work submitted within 24 hours past the deadline, 10 points will be deducted. No credit will be given for any submissions afterwards.

• If you miss anything (even if it is one sub-question), you will lose 10 points. If you complete at least half, you will lose 20 points. No credit if less than half is done.

5. [Problem Sets] When will problem sets and solutions be posted?

Problem sets will be available on Canvas one week before each deadline and the solution will be posted immediately after the submission due date.

6. [Problem Sets] Now that I think about it, there was a problem set grade X weeks ago that I really think should have been higher.

If you believe there has been a mistake in any grade you have two weeks from the date it was posted to bring it to the attention of the TA.

7. [Quizzes] How are the quizzes graded?

Quizzes will be graded based on effort only. There are no make-up quizzes.

8. [Exams] What material will be covered on the exam and how can I prepare for it?

Each exam will cover material reviewed in class to date; however, recently-reviewed material will receive a large weight in each respective exam. Exams will cover all lecture materials, including in-class discussions on models and empirics, quizzes, problem sets. Before each exam, I will provide a practice exam, part of which, we will go over together during the review session.

9. [Exams] What do I do if a mistake was made in grading my exam?

After the exam is returned, please submit a written account of your grading concern to the TA within two weeks. Any requests submitted after that will not be considered.

10. [Grades] I'm really close to the cutoff for a letter grade X. Is there any way my grade can be rounded up?

There is no reason your grade should be rounded up when the grades of others are not. As a policy I do not respond to e-mails requesting for a change in grade of this kind.

11. [Sections] What happens during weekly Discussion Sections with the TA?

The TA will review the key concepts and materials covered in lecture and provide additional practice questions to enhance your understanding of the contents.

Course Outline and Reading List

• Lecture 1, March 30: Introduction, Microeconomics Review

    Recommended Reading:

■ K-O-M Chapter 1, 2

• Lecture 2, April 1: Ricardo I

    Recommended Reading:

■ K-O-M Chapter 3

    Optional Reading:

■ Mary Amiti and Shang-Jin Wei (2004), "Demystifying Outsourcing," Finance and Development

■ Walker Hanlon (2015). “Necessity is the Mother of Invention: Input Supplies and Directed Technical Change,” Econometrica

• Lecture 3, April 6: Ricardo II

    Recommended Reading:

■ K-O-M Chapter 3

    Optional Reading:

■ Nick Bloom, Mirko Draca, John Van Reenen (2015). “Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IO, and Productivity,” Review of Economic Studies

• Lecture 4, April 8: Ricardo III

    Recommended Reading:

■ K-O-M Chapter 3

    Optional Reading:

■ Bela Belassa (1963), "An Empirical Demonstration of Classical Comparative Cost Theory," Review of Economics and Statistics

■ Dave Donaldson (2010), “Railroads of the Raj: Estimating the Impact of Transportation Infrastructure,” American Economic Review

• Lecture 5, April 13: Ricardo IV & Practice Midterm 1

    Problem Set 1 due

    April 13, 11:40 am – April 14, 11:40 am (Pacific Time)

• Midterm 1 (April 15)

• Lecture 6, April 20: Specific Factors Model I

    Recommended Reading:

■ K-O-M Chapter 4

• Lecture 7, April 22: Specific Factors Model II

    Recommended Reading:

■ K-O-M Chapter 4

• Lecture 8, April 27: Heckscher-Ohlin I

    Recommended Reading:

■ K-O-M Chapter 5

• Lecture 9, April 29: Heckscher-Ohlin II

    Recommended Reading:

■ K-O-M Chapter 5

    Optional Reading:

■ David Autor, David Dorn, and Gordon Hanson (2013), “The China Syndrome: Local Labor Market Effects of Import Competition in the United States,” American Economic Review

■ Trefler (1995), “The Case of Missing Trade and Other Mysteries,” American Economic Review

• Lecture 10, May 4: Heckscher-Ohlin III & Practice Midterm 2

    Problem Set 2 due

    May 4, 11:40 am – May 5, 11:40 am (Pacific Time)

    Recommended Reading:

■ K-O-M Chapter 5

• Midterm 2 (May 6)

• Lecture 11, May 11: Standard Trade Models

    Recommended Reading:

■ K-O-M Chapter 6

    Optional Reading:

■ Claudia Steinwender (2014), “Information Frictions and the Law of One Price: `When the States and the Kingdom Became United,’” Harvard mimeo

• Lecture 12, May 13: Increasing Returns Model

    Recommended Reading:

■ K-O-M Chapter 7

    Optional Reading:

■ Paul Krugman (1980), "Scale Economies, Product Differentiation, and the Pattern of Trade,” American Economic Review

■ Pinelopi Goldberg, Amit Khandelwal, Nina Pavcnik, Petia Topalova (2015). “Imported Intermediate Inputs and Domestic Product Growth: Evidence from India”, Quarterly Journal of Economics

• Lecture 13, May 18: External Economies of Scale & Multinational Firms and FDI

    Recommended Reading:

■ K-O-M Chapter 8

    Optional Reading:

■ Lael Brainard (1997), "An Empirical Assessment of the Proximity-Concentration Trade-Off Between Multinational Sales and Trade," American Economic Review

■ Pol Antras (2003), “Firms, Contracts, and Trade Structure,” Quarterly Journal of Economics

• Lecture 14, May 20: Instruments of Trade Policy I

    Problem Set 3 due

    May 20, 11:40 am – May 20, 11:40 am (Pacific Time)

    Recommended Reading:

■ K-O-M Chapter 9

    Optional Reading:

■ Robert Feenstra (1992), "How Costly is Protectionism?" Journal of Economic Perspectives

■ Paul Krugman (1987), "Is Free Trade Passé?" Journal of Economic Perspectives

• Lecture 15, May 25: Instruments of Trade Policy II & Political Economy of Trade

    Recommended Reading:

■ K-O-M Chapter 10

    Optional Reading:

■ Robert Baldwin (1989), "The Political Economy of Trade Policy," Journal of Economic Perspectives

• Lecture 16, May 27: Trade Policy and Multilateral Trade Agreements

    Recommended Reading:

■ K-O-M Chapter 12

    Optional Reading:

■ Alan Deardorff and Robert Stern (2000), "What the Public Should Know about Globalization and the World Trade Organization"

■ Douglas Irwin (2000), "Did Late Nineteenth-Century U.S. Tariffs Promote Infant Industries?" Journal of Economic History

• Course Review & Practice Final (June 1)

    Problem Set 4 due

    June 1, 11:40 am – June 2, 11:40 am (Pacific Time)

• In-class Office Hours (June 3)

• Final Exam (June 8, 12 pm – 3 pm)

Intellectual Property and Copyright of Course Materials

My lectures and course materials, including powerpoint presentations, tests, outlines, and similar materials, are protected by U.S. copyright law and by University policy. I am the exclusive owner of the copyright in those materials I create. You may take notes and make copies of course materials for your own use. You may also share those materials with another student who is registered and enrolled in this course. You may not reproduce, distribute or display (post/upload) lecture notes or recordings or course materials in any other way — whether or not a fee is charged — without my express written consent. You also may not allow others to do so. If you do so, you may be subject to student conduct proceedings under the UC Santa Cruz Student Code of Conduct, Section 102.23. Similarly, you own the copyright in your original papers and exam essays. If I am interested in posting your answers or papers on the course web site, I will ask for your written permission.

Disability Accommodation

UC Santa Cruz is committed to creating an academic environment that supports its diverse student body. If you are a student with a disability who requires accommodations to achieve equal access in this course, please submit your Accommodation Authorization Letter from the Disability Resource Center (DRC) to me privately during my office hours or by appointment, preferably within the first two weeks of the quarter. At this time, I would also like us to discuss ways we can ensure your full participation in the course. I encourage all students who may benefit from learning more about DRC services to contact DRC by phone at 831-459-2089 or by email at [email protected]. If you wish to exercise your testing accommodation, you must notify me as your instructor at least 7 days prior to the exam so that we can secure testing space and a test proctor. Request made inside 7 days may not be able to be accommodated.

Academic Integrity & Misconduct Statement

Academic Integrity is the cornerstone of education and expected of all students. Academic dishonesty and misconduct erodes the value of education for all and will be addressed by the campus’s policy accordingly. Policies are discussed at the following sites: 

https://registrar.ucsc.edu/navigator/section1/academic-integrity.html

https://ue.ucsc.edu/academic-misconduct.html

UCSC Campus Advocacy, Resources and Education (CARE)

The UCSC Campus Advocacy, Resources and Education (CARE) Unit promotes an environment where people can learn and work while being safe and healthy and offers a confidential space to discuss issues. 

See: https://care.ucsc.edu/who-we-are/about-care.html

Title IX

Title IX prohibits gender discrimination, including sexual harassment, domestic and dating violence, sexual assault, and stalking. If you have experienced sexual harassment or sexual violence, you can receive confidential support and advocacy at the Campus Advocacy Resources & Education (CARE) Office by calling (831) 502-2273. In addition, Counseling & Psychological Services (CAPS) can provide confidential, counseling support, (831) 459-2628. You can also report gender discrimination directly to the university’s Title IX Office, (831) 459-2462. Reports to law enforcement can be made to UCPD, (831) 459-2231 ext. 1. For emergencies call 911.