Prof. Dr. Dr. h. c. Karl-Heinz Paqué Chair of International Economics International Trade 0. Table of Content

Lecture: INTERNATIONAL TRADE Time: Friday, 7-11 h 17.07.2018 Lecture: INTERNATIONAL TRADE Time: Friday, 7-11 h Place: G22A-H2 ! Starting November 10th, place: G22A-020! Canceled: 20.10.17 27.10.17 15.12.17 03.11.17 08.12.17 10.11.17 Important: For canceled lectures and additional lectures please check homepage!

OVERVIEW: 1 What Is International Trade About? 2 World Trade: Some Observations 3 Trade Theory I: Labour Productivity and Comparative Advantage: The Ricardian Model 4 Trade Theory II: Resources and Trade: The Heckscher-Ohlin Model 5 Trade Theory III: Selected Topics in a Standard Trade Model 6 Trade Theory IV: Imperfect Markets and Trade 7 Theory of International Factor Movements: Migration and Capital Flows 8 Trade Policy I: The Instruments 9 Trade Policy II: The Political Economy 10 Trade Policy III: Growth and Development 11 Trade Policy IV: Past and Current Issues 12 The Future: Theory and Policy

Literature: The lecture largely follows the structure and contents of the textbook by Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz, International Economics – Theory and Policy, 10th Edition. 2014. Older editions of the book can be used except if otherwise noted in the course of the lecture.

CONTENTS IN DETAIL: 1 What Is International Trade About? 2 World Trade: Some Observations 3 Trade Theory I: Labour Productivity and Comparative Advantage: The Ricardian Model 3.1 The Model 3.2 Gains From Trade 3.3 Comparative Advantage 3.4 Extended Model Versions 3.5 Transport Costs and Non-Tradable Goods 3.6 Empirical Evidence

4 Trade Theory II: Resources and Trade: The Heckscher-Ohlin Model 4.1 The Model 4.2 The Effects of Trade 4.2.1 Relative Prices and the Pattern of Trade 4.2.2 Trade and the Distribution of Income 4.2.3 Factor Price Equalisation 4.3 Gains from Trade 4.4 Empirical Evidence 5 Trade Theory III: Selected Topics in a Standard Trade Model 5.1 The Model 5.2 Terms of Trade Changes 5.3 Biased Growth 5.4 International Transfers of Income 5.5 Import Tariffs and Export Subsidies 5.6 Another Device: Offer Curves

6 Trade Theory IV: Imperfect Markets and Trade 6.1 The Theory of Imperfect Competition 6.1.1 Monopolistic Competition 6.1.2 The Effect of Market Size 6.2 Heterogeneous Firms 6.3 Trade Costs 6.4 Dumping 6.5 External Economies of Scale 6.6 Economic Geography 7 Theory of International Factor Movements: Migration and Capital Flows 7.1 Labour Mobility 7.2 Borrowing and Lending 7.2.1 Intertemporal Trade 7.2.2 Comparative Advantage 7.3 Direct Foreign Investment

8 Trade Policy I: The Instruments 8.1 Partial Equilibrium Analysis of a Tariff 8.2 Costs and Benefits of a Tariff 8.3 Other Instruments of Trade Policy 8.4 General Equilibrium Analysis of a Tariff 8.5 Trade Policy in the Presence of Monopoly 8.6 The Effective Rate of Protection

9 Trade Policy II: The Political Economy 9.1 The Case for Free Trade 9.2 National Welfare Arguments Against Free Trade 9.3 Income Distribution and Trade Policy 9.4 Trade Negotiations and Agreements 9.4.1 Some Theory and History 9.4.2 General Agreement on Tariffs and Trade (GATT) 9.4.3 World Trade Organisation (WTO) 9.5 Preferential Trade Agreements 9.5.1 Trade Diversion and Trade Creation 9.5.2 EU and EFTA 9.5.3 NAFTA and others

10 Trade Policy III: Growth and Development 10.1 A Policy of Import Substitution 10.1.1 Infant Industry Argument 10.1.2 Protection of Manufacturing 10.1.3 The Switch to Liberalisation 10.2 A Policy of World Market Orientation 10.2.1 Idea and Concept 10.2.2 Reality: East Asian Growth 10.2.3 Trade and Industrial Policy

11 Trade Policy IV: Past and Current Issues 11.1 Strategic Trade Policy 11.1.1 The Idea 11.1.2 Case Studies 11.2 The Effects of Globalisation 11.2.1 Trade and Wages 11.2.2 Social Standards 11.2.3 Environmental Standards 11.3 Transatlantic Trade and Investment Partnership (TTIP) 12 The Future: Theory and Policy