Week

Day

Contents of Lecturers or Seminars

To read / study before[1]

W1

1.a. Presentation of the course. Administrative and logistic details: presence, midterm exams, regular exams, class presentations. Background, motivation. 

1.b. Introduction to the main analytical categories used in this course: productivity and international division of labour, technological differences and commodity composition of trade flows. The classical instruments of international economics: pure theory and monetary theory.

K.O.M. Ch. 1, 2, 13 (R)

2.a. The object of the Pure Theory of International Trade: Hypotheses on the origin of international trade; merchandise composition of trade; effects of trade on the allocation of resources and welfare.

2.b. The Labour Theory of Value as the basis for the Classical Theory of International Trade. Absolute vs. comparative advantages. Opportunity costs and comparative advantages.

K.O.M. Ch. 1, 2 (R)

W2

3.a. Practice session: Review of production theory (production and cost function, isoquants and isocost curves, transformation and contract curve).

Instructor’s material

3.b. The Ricardian model.

K.O.M. Ch. 3 (S)

W3

3.c. Practice session: The Ricardian model.

Instructor’s material

4.a. Specific factors model and income distribution.

K.O.M. Ch. 4 (S)

W4

3.d. Practice session: The Ricardian model with a continuum of goods and increasing returns to scale.

Krugman ’87

5.a. Introduction to the Heckscher-Ohlin (H-O) model: The Heckscher-Ohlin, Rybczynski and Stolper-Samuelson theorems with fixed production coefficients.

K.O.M. Ch. 5, Appendix to Ch. 5 (S)

W5

5.b. The Heckscher-Ohlin (H-O) model (continued): The Heckscher-Ohlin, Rybczynski and Stolper-Samuelson theorems with fixed production coefficients, factor price equalization.

K.O.M. Ch. 5, Appendix to Ch. 5 (S)

W6

5.c. Practice session: The Heckscher-Ohlin model.

Instructor’s material

6.a. Trade with international fragmentation of production.

K.O.M. Ch. 8 (R)

W7

7.a. Practice session: Commercial policies..

Instructor’s material

7.b. Commercial policies: Import tariffs and export subsidies in a small economy

K.O.M. Ch.  9, 10 (S)

W8

8. Review session in preparation for the first midterm:  Review of theory, numerical examples, questions and answers.

1^st MIDTERM EXAM

W9

9.a. Introduction to the main current problems of international economics: The 2007-20?? crisis, neutrality of monetary policy and recessionary fiscal policy in Europe. Understanding the current macroeconomic scenario.

Instructor’s material

9.b. The main current problems of international economics (continued): The 2007-20?? crisis, neutrality of monetary policy and recessive fiscal policy in Europe, the Bretton Woods system. Understanding the current macroeconomic scenario.

Instructor’s material; K.O.M. Ch. 19 (R)

W10

10.a. The IS-LM model: The real side of the economy, consumption, investment, government spending, net exports.

10.b. The IS-LM model: The monetary side of the economy, money supply and demand.

Instructor’s material; K.O.M. Ch. 15 (R)

W11

10.c. Practice session: the IS-LM model.

Instructor’s material

11.a. Definition of exchange rate and functioning of the foreign exchange market. Real exchange rate and price competitiveness of goods under free international trade.

Instructor’s material; K.O.M. Chap. 14 (S)

W12

Main models used to determine the exchange rate:

11.b. The Law of One Price and Purchasing Power Parity (PPP);

11.c. The Keynesian model with sticky prices;

11.d. Price level and exchange rate in the long run: the Neoclassical model; 11.e. The Monetary model.

Instructor’s material; K.O.M.
Chap. 15, 16 (S)

W13

12.a. The Dornbusch’s exchange rate overshooting model (1976).

Instructor’s material (Sokol’s notes); K.O.M.
Chap. 15 (R)

12.b. Applications of the Dornbusch model to the study of permanent andtransitory effects of exogenous shocks.

Instructor’s material

W14

12.c. Practice session: The Dornbusch model.

Instructor’s material

13.a. Practice session: A model of crises in emerging markets.

Caballero, Krishnamurthy ’01, ’02

W17

13.b. Practice session: A model of crises in emerging markets.

Caballero, Krishnamurthy ’01, ’02

4. Review session in preparation for the second midterm:  Review of theory, numerical examples, questions and answers.