THE UNIVERSITY OF MICHIGAN
Gerald R. Ford School of Public Policy
and
Department of Economics

SPP/ECON 541
INTERNATIONAL TRADE POLICY

SYLLABUS
Fall 2008, Alan Deardorff

Text Requirements Schedule Disabilities Contacts Readings

PURPOSE: The aim of this course is to teach you a lot about the economics -- and a little about the institutions -- of international trade and trade policy. The course is companion to SPP/Econ 542, International Finance Policy, which deals with international macroeconomic topics such as the balance of trade and balance of payments, determination of exchange rates, and international macroeconomic policies. Each course will also include the bare essentials of the other course so that if you take only one of them, you won't be lost.

The course is mainly about trade policy. You will learn what trade policies are, how they are used by the United States and other countries, and how their use is restricted by international agreements. More importantly you will learn how to use economic modeling to understand the effects of trade policies and to quantify these effects. Along the way you will also learn about the institutions of the world economy, especially those that have to do with trade. And you will learn a little bit about the economic theories of why nations trade, and why they gain from trade.

Prerequisite: SPP/Econ 555 or equivalent courses in intermediate microeconomics
Organization: The course meets twice a week, Mondays and Wednesdays, 8:30-10:00 AM, in room 1230 Weill.


TEXTs

REQUIREMENTS

Problem Sets   0%
Papers 40%
Exam #1 30%
Exam #2 30%
SCHEDULE

Paper #1 Monday, September 29 8:40 AM
Paper #2 Monday, October 27 8:40 AM
Exam #1 Monday, November 10 in class
Paper #3 Monday, November 17 8:40 AM
Paper #4 Monday, December 8 8:40 AM
Exam #2: Tuesday, December 16 8:00 - 10:00 AM

WRITING ASSISTANCE

STUDENTS WITH DISABILITIES

WHERE AND WHEN TO FIND ME


COURSE OUTLINE AND READING LIST
NOTE: Click title for citation; click Online for item if on the web.

I. Overview of the International Economy
A. International Transactions and the Trade Balance (Sep 3, 8)
K-O, Chs. 1,12
BEA, recent "International Data" | Online
WTO, "International Trade Statistics," | Online
Bivens, "Shifting Blame" | Online
Buffett, "Selling the Nation" | Online
B. Exchange Rates (Sep 10)
K-O, Ch. 13 (8th ed. pp. 317-327; 7th ed. pp. 306-316)
Swagel, "China Should Revalue" | Online
McKinnon, "Currency Wars" | Online
C. Policies and Institutions: International (Sep 15, 17)
K-O, Ch. 9 (8th ed. pp. 227-238; 7th ed. pp. 223-231)
Jackson, Ch. 1, pp. 1-11, Ch. 2
Economist, "The Doha Round," | Online
Bezlova, "China's Doha Line," | Online
Francois, "Doha Round Failure" | Online

D. Policies and Institutions: National (Sep 22, 24)
Jackson, Ch. 3
Verrill, "U.S. Trade Remedies" | Online
Barfield, "The Fast Track Trade War" | Online
USTR, "U.S. FTA Agenda" | Online
European Union, "The EU and the WTO" | Online
II.Tariffs and NTBs
A.Tariffs (Sep 29, Oct 1)
K-O, Ch. 8 (8th ed. pp. 182-192; 7th ed. pp. 176-186)
Deardorff, "Nontariff Barriers and Domestic Regulation" | Online
Irwin, "Against the Tide" | Online
B.Non-tariff Barriers (Oct 6, 8)
K-O, Ch. 8 (8th ed. pp. 192-200, 208-211; 7th ed. pp. 186-195, 203-206)
Jackson, Ch. 5, pp. 153-156
Laird, "Quantifying Commercial Policies" (available on CTools)
Feenstra, "How Costly Is Protectionism?" | Online-JSTOR
C.Why Countries Restrict Trade (Oct 13)
K-O, Ch. 9 (8th ed. pp. 212-227; 7th ed. pp. 207-223)
Deardorff and Stern, "Introduction" (available on CTools)
Baldwin and Magee, "Is Trade Policy For Sale?" | Online-Proquest
III. The Theory of International Specialization and Exchange
A. The Standard Trade Model (Oct 15, 22)
K-O, Ch. 5
*** FALL STUDY BREAK, Oct 20-21 ***
B. Behind the Standard Trade Model: Comp. Adv., Inc. Dist. (Oct 27)
K-O Ch. 3 on comparative advantage (8th ed. pp. 27-42; 7th ed. pp. 24-40)
K-O Ch. 4 on effects of trade (8th ed. pp. 64-71; 7th ed. pp. 61-67)
Deardorff, "Intro to Comparative Advantage" | Online
Freeman, "Are Your Wages Set in Beijing?" | Online-JSTOR
C. Scale Economies and Imperfect Competition (Oct 29, Nov 3)
K-O, Ch. 6
C. Catch up and Review (Nov 5)
*** EXAM #1, in class, Monday Nov 10 ***
(Covers through assignments for Nov 3, Scale Economies and Imperfect Competition.)
IV. Uses and Abuses of Trade Policy
A.Safeguards and Trade Adjustment Assistance (Nov 12, 17)
Jackson, Ch. 7
James, "Maladjusted" | Online
Brainard et al., "Insuring America's Workers" | Online
B.Dumping and Anti-Dumping Policy (Nov 19, 24)
Jackson, Ch. 10
Deardorff, "Economic Perspectives on Anti-Dumping Law" | Online
Prusa, "Anti-Dumping" | Online-Blackwell Synergy
Mastel, "Keep Anti-Dumping" | Online
FYI: World Trade Interactive, "Zeroing in Antidumping," Oct. 3, 2008. Online
C.Subsidies and Countervailing Duties (Nov 26, Dec 1)
K-O, Ch. 11 (8th ed. pp. 268-272; 7th ed. pp. 262-266)
Jackson, Ch. 11
FAO, "Cotton Subsidies" | Online
Tupy, "Who Pays?" | Online
D.Preferential Trading Arrangements (Dec 3)
K-O, Ch. 9 (8th ed. pp. 239-243; 7th ed. pp. 232-236)
Bhagwati, "Regionalism and Multilateralism" (available on CTools)
Krueger, "NAFTA's Effects" | Online-Blackwell-Synergy
Scott and Ratner, "NAFTA's Cautionary Tale" | Online
*** NO CLASS, Dec 8 ***
*** EXAM #2, Tuesday, Dec 16, 8:00-10:00 AM ***
(Semi-cumulative)