ISI Faculty Resource Center

Purpose

The main objectives of the class are that students develop a better understanding of 1) how countries are economically interdependent, and 2) the policy implications of this interdependence. To develop this understanding, this class has an emphasis on trade policy, where we will cover the basic theory of international trade. International trade theory will allow us to comprehend the foundations of why countries trade with each other. We will go beyond the theory and emphasize on how countries actually trade and are financially interconnected. For the practical part of the class, we will focus on the international trade and financial systems, where topics such as the WTO, balance of payments, and foreign exchange rates will be discussed. We will also cover other additional topics related to the global economy and globalization throughout the semester.

Required books

Feenstra, Robert and Taylor, Alan, 2008, International Economics, 1st Edition, Worth Publishers (Textbook, ISBN 1-4292-0690-X) – available with rent-a-text.com (strongly encouraged to use the rental option)

Rivoli, Pietra, 2005, The Travels of T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade, Wiley and Sons – might be available with rent-a-text.com

Roberts, Russell, 2007, The Choice: A Fable of Free Trade and Protection, 3rd Edition, Paperback, ISBN-10: 0131433547

Class Structure

Lecture outlines, assignments, and journal articles/book chapters will be available online (Sakai).  There will be 3 individual assignments (approx) and several ongoing class activities. In class activities will be to 1) direct discussion on a specific reading assignment, 2) provide a summary of an article to the class, and 3) present a current WTO trade policy review for a specific country (some activities will be assigned by teams). Students will be required to participate in class continuously, and this participation will count towards their grade. There will be one exam and one final paper (2 versions of the final paper are required).   

Final Paper

The student must develop an empirical research paper, a policy debate analysis, or a case study on a topic related to the global economy.  A brief explanation of the different types of papers goes as follows (further explanation will be given during the first two weeks). An empirical research paper must include a literature review, the development of an empirical methodology to answer a research question, and empirical results. The policy debate analysis should present both sides of the debate on specific issue and an analysis of the policy implications of each side with a conclusion. The case study must provide a deep analysis of a specific problem and possible solutions to the problem. Students must submit two versions of the paper, one in the middle of the semester (approximately), and the other one at the end of the semester. Several small submission related to the final paper will be required throughout the semester (proposal, outline, literature review). Students will also do a formal presentation on their work at the end of the semester. Students who specialize on economics or intend to work on that field are strongly encouraged to do an empirical research paper.

Plagiarism

This course requires electronic submission of the draft and final paper through the plagiarism detection service Turnitin (http://www.turnitin.com). Turnitin is an online plagiarism detection service that conducts textual similarity reviews of submitted papers. When papers are submitted to Turnitin, the service will retain a copy of the submitted work in the Turnitin database for the sole purpose of detecting plagiarism in future submitted works. Students retain copyright on their original course work. Please refer to the link below on citation and style (APA citation required for final paper). Also, check from the link below for examples that will help you to understand what plagiarism represents and how to avoid it. Plagiarism will result in disciplinary action as stated in the academic catalog.

Citation: http://library.pepperdine.edu/information/guides/general/citation_guides.html

Plagiarism examples: http://www.indiana.edu/~istd/examples.html

Grading Procedure

The grading weights will be as following:

Exam                            30%

Final Paper                 30% (10% Paper V.1, 10% Paper V.2, 10% final presentation)

Assignments              15%

Class activities           15%

Participation                10%                                                 

Grading Policy

If a student wishes to discuss about specific points in his or her own exam or assignment, the student must wait until the next office hours to discuss this. Students have two weeks after an exam (or an assignment) is returned to contest a grade. Questions about your grade after that point will not be considered. Students should review graded examinations soon after they are returned to be sure everything is in order. Please exercise caution in contesting a grade on any exam as I reserve the right the re-grade your entire exam should you request more points on a particular question. Student must submit in writing their reconsideration of a grade. Exams will be graded on a 100 point scale and your final grade will be estimated following the weights mentioned above. The appropriate letter grade will be assigned to the final grade following the ranges below (critical point in terms of decimals is 0.56, i.e. an 89.56 is a 90, while and 89.55 is an 89). Grades will be based on both absolute and relative performance.
 

Attendance

Attendance is expected to each session.  The study of economics is concerned with the choice that individuals make in the face of incentives and constraints.  Rational economic agents choose (after weighting the marginal costs and marginal benefits), on average, that action which provides them a benefit greater than the cost.  Therefore, it is hoped that students chose to attend class based on the idea that the marginal benefits of attendance will far outweigh their marginal costs.  In case a student misses a session, the student will be responsible for the material covered in that day and to make arrangements if an assignment is due on that day.  Absence will have an adverse effect on student grades since participation in class counts towards the grade and the material covered in class is relevant for exams.

Participation

It is expected that the student will take an active role in their learning process, where attendance and contribution to the class are expected. A good participation in this class requires that the student comes to class prepared (had done readings and assignments) and contributes to the learning of other students. Active participation also requires that the student attention is focused on the class lecture and discussion. At the end of the semester students will be required to turn in their self-evaluation of participation in class. I will determine the student participation grade based on the student’s self assessment and my own assessment of the student contribution to the class.

Laptops and other classroom policies

The use of laptops in class, besides being used as a tool for taking notes or for in class activities, is banned from class due to the negative externality it produces on other students and the professor. Students will be under an honor code in relation to the adequate use of computers. Because this class requires active participation, using a laptop in a disruptive way will affect the student’s participation grade. Tardiness affects the flow of the class and it is distracting; it cannot be tolerated in a regular basis.

Class objectives and their relation with the class structure

Objective 1– Understanding the world in which we live and the important role that trade and globalization play

Related Activities– In class lectures and exercises, assignments, presentations, discussion and exam

Objective 2– Improving research and writing skills by being able to develop a methodology to answer a research question, analyze a policy debate, or present a case study

Related activities– Final paper, final paper presentation, and discussion of articles

Special Academic Accommodations

Any student with a documented disability (physical, learning, or psychological) needing academic accommodations should contact the Disability Services Office (Main Campus, Tyler

Campus Center 264, x6500) as early in the semester as possible. All discussions will remain confidential. Please visit http://www.pepperdine.edu/disabilityservices/ for additional information.

Tentative Course Outline

Topics may be added or omitted depending on the progress of the session 

Discussions will be done throughout the semester

Chapter numbers are for Feenstra and Taylor, unless stated otherwise

Course is divided in four units, with specific topics to cover shown below (outline below)

 

1. What is the global economy? (Relevance)

• Understanding the world and the global economy (Ch 1)
• Waves of globalization
•  Classical theory of international trade (1700s and 1800s writings on trade)

Additional topics: Global economic prospects, aftermath of financial crisis of 2008

 

2. Why do we trade? (Trade theory)

• Ricardian Model (Ch 2)
• Specific-Factors Model (Ch3)
• Heckscher-Ohlin Model (Ch 4)
• Extensions and new explanations for trade (Ch 5, 6, and 7; selected parts)

Additional topics: free versus fair trade, Trade and growth

 

3. How do we trade? (Trade policy)

• Instruments of trade policy (import tariffs, import quotas, and export subsidies - Ch 8, 9, and 10; selected parts)
• International trade system (WTO and international trade agreements, Ch 11)
• Political economy of trade policy (Arguments for and against free trade)

Additional topics: Trade and politics, US trade policy, WTO Policy Reviews

 

4. How are we interconnected? (International finance, selected readings)

• Balance of payments
• Foreign Exchange rates
• International monetary arrangements and financial institutions (IMF, WB)

Additional topics: trade deficit versus trade surplus, financial crisis, foreign aid

 

*Syllabus built for a 15 week course with detailed description of tentative outline per week

 

Detailed class outline by week– Tentative

Topics and articles may be added or omitted depending on the progress of the session   

 

1. What is the global economy? (Relevance)

Week 1

Topics:

• Understanding the world and the global economy
• Waves of globalization

 

In class activities/assignments:

• Commanding Heights: The Battle for the World Economy, film (selected parts)
• Globalization Challenge – How much do you know about the global economy?

 

Readings:

• Feenstra and Taylor, Chapter 1
• Clark, Gregory, 2007, A Farewell to Alms, A Brief History of the World, Princeton University Press– Chapter 17, Why isn’t the whole world developed?
• Altman, Roger C. Globalization in Retreat. Foreign Affairs 88.4 (2009): 2-7. Military & Government Collection.

 

Week 2

Topics:

• Classical theory of international trade (1700s and 1800s writings – back then)

Additional: Global economic prospects (today) - http://go.worldbank.org/PF6VWYXS10

Final paper guidelines

 

In class activities/assignments:

• Discussion of student selected articles

 

Readings:

• Hume, David, Essays, Moral, Political, and Literary (under Political Discourses, 1752). Liberty Fund, Inc. 1987. Ed. Eugene F. Miller. Library of Economics and Liberty. (selected chapters)
• Ricardo, David, On the Principles of Political Economy and Taxation (1st published 1817). John Murray. 1821. Library of Economics and Liberty. (selected chapters)
• Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations (1st published 1776). Methuen and Co., Ltd. 1904. Ed. Edwin Cannan. Library of Economics and Liberty. (selected chapters)
• Mill, John Stuart. Principles of Political Economy with some of their Applications to Social Philosophy (1st published 1848).  William J. Ashley, ed. 1909. (selected chapters)
• Frédéric Bastiat, The Law, trans. Dean Russell, (1st published 1850).  Irvington-on-Hudson NY: Foundation for Economic Education, 1998. Accessed from http://oll.libertyfund.org/title/78 on 2010-08-04. (selected chapters)
• World Bank, 2010 (summer) Global economic prospects, online http://go.worldbank.org/PF6VWYXS10
• The Global Economy in the news
  • Globalization Revolution, January, 2010, Newsweek
  • Free-Trade Winds May Be Blowing Again, July, 2010, WSJ
  • Austerity alarm, July 2010, The Economist

2. Why do we trade? (Trade theory)

Week 3

Topics:

• Ricardian Model

Additional: Free trade Vs. Fair trade

 

In class activities/assignments:

• Student needs to provide proposal for final paper (one page with 10 references; beginning of class)

 

Readings:

• Feenstra and Taylor, Chapter 2
• Russell, Ch1 through Ch7
• Bhagwati, Jagdish, 2001, Free trade today, Princeton: Princeton University Press. Ch 1

 

Week 4

Topics:

• Specific-Factors Model

Additional: Free trade Vs. Fair trade

 

In class activities/assignments:

• Student needs to meet with professor to discuss proposal

 

Readings:

• Feenstra and Taylor, Chapter 3
• Russell, Ch8 through Ch16
• Stiglitz, 2007, Making globalization work, W.W. Norton and Company: New York. Chapters 1 and 3

 

Week 5

Topics:

• Heckscher-Ohlin Model

Additional: Free trade Vs. Fair trade

 

In class activities/assignments:

• Assignment 1 is due (beginning of class)
• Free trade Vs. Fair trade in class exercise

 

Readings:

• Feenstra and Taylor, Chapter 4
• Free trade Versus Fair trade selected readings and links
• Lawrence, Robert Z. 2007. "A True Development Round? A Review of Joseph E. Stiglitz and Andrew Charlton's Fair Trade for All: How Trade Can Promote Development." Journal of Economic Literature, 45(4): 1001–1010.
• The Economist - Fair trade debate http://www.economist.com/debate/overview/172
• Free trade versus fair trade debate - blog http://blogs.the-american-interest.com/bhagwati/2010/06/18/67/
• Reason.tv: Jagdish Bhagwati on Free Trade, Protectionism, and Barack Obama http://reason.com/blog/2010/04/09/reasontv-jagdish-bhagwati-on-f

 

Week 6 – Oct 5 & Oct 7

Topics:

• Extensions and new explanations for trade (movements of labor and capital)

 

In class activities/assignments:

• Commanding Heights: The Battle for the World Economy, film (selected parts)
• Advance for final paper due on Oct 7 (intro and outline page, and other 10 references)

 

Readings:

• Feenstra and Taylor, Chapters 5, 6, and 7 (selected parts)

 

Week 7

 

Topics:

Additional: Trade and growth

 

In class activities/assignments:

• Assignment 2 due (beginning of class)
• Student selected articles

 

Readings:

• Bhagwati, Jagdish, 2004, In Defense of Globalization. New York: Oxford University Press. Chapter 2
• Rodriguez, Francisco, 2007, Openness and growth, what have we learned? DESA Working paper No. 51.
• Rodrik, Dani. One Economics, 2007, Many Recipes: Globalization, Institutions, and Economic Growth. Princeton: Princeton University Press. Chapter 8
• Spence, Michael, and Danny M. Leipziger. 2010, Globalization and Growth: Implications for a Post-Crisis World. Washington, D.C: World Bank. Selected chapters

 

Week 8

 

Topics:

• Review for exam

 

In class activities/assignments:

• Exam, in class (2 hours) –Topics 1, 2, and additional topics covered

 

3. How do we trade? (Trade policy)

Week 9

Topics:

• Instruments of trade policy (import tariffs, import quotas, and export subsidies. Ch 8, 9, 10)

Additional: Trade and politics

 

In class activities/assignments:

• Mardi Gras: Made in China, film (selected parts)
• Students direct discussion on Rivoli’s book

 

Readings:

• Feenstra and Taylor, Chapters 8, 9 & 10
• Rivoli, Chapters 1 though 8

 

Week 10

Topics:

• International trade system (WTO and international trade agreements, Ch 11)

Additional: Trade and politics

 

In class activities/assignments:

• Made in LA, film (selected parts)
• Students direct discussion on Rivoli’s book
• Final paper version 1 due on Nov 4

 

Readings:

• Feenstra and Taylor, Chapter 11
• Rivoli, Chapters 9 though 15

 

Week 11

Topics:

• Political economy of trade policy (Arguments for and against free trade)

Additional: US trade policy, WTO trade policy reviews

 

In class activities/assignments:

• US trade policy in class exercise on Nov 9
• WTO trade policy reviews – selected countries on Nov 11

 

Readings:

• Obstfeld, Maurice, and Paul R. Krugman. 2009, International Economics: Theory and Policy. The Addison-Wesley series in economics. Boston: Addison Wesley, 8 edition. Ch 9
• US trade policy links
  • US trade policy review (WTO) - http://www.wto.org/english/tratop_e/tpr_e/tp300_e.htm
  • http://www.state.gov/e/eeb/tpp/
  • http://trade.gov/
  • http://www.ustr.gov/about-us/mission
  • http://www.fas.usda.gov/ustrade.asp(agricultural policy)

 

4. How are we interconnected? (International finance)

Week 12

Topics:

• Balance of payments

Additional: Trade deficit versus trade surplus

         

In class activities/assignments:

• Assignment 3 due (beginning of class)
• Trade deficit in class exercise

 

Readings:

• Quiggin, John (2004) "The Unsustainability of U.S. Trade Deficits," The Economists' Voice: Vol. 1 : Iss. 3, Article 2.
• Grennes, Thomas J. (2005) "Neither Borrower nor Lender Be: A Letter commenting on "The Unsustainability of U.S.Trade Deficits" by John Quiggin," The Economists' Voice: Vol. 2 : Iss. 2, Article 2.
• Bergsten, C. Fred. 2009. "The Dollar and the Deficits." 20-38. Foreign Affairs, 2009.
• Mann, Catherine L. 2002. "Perspectives on the U.S. Current Account Deficit and Sustainability." Journal of Economic Perspectives, 16(3): 131–152.
• Feldstein, Martin 2008. "Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate." Journal of Economic Perspectives, 22(3): 113–25.
• Cooper, Richard N. 2008. "Global Imbalances: Globalization, Demography, and Sustainability." Journal of Economic Perspectives, 22(3): 93–112.
• US Trade deficit commission, 2000
  • http://govinfo.library.unt.edu/tdrc/index.html
  • http://govinfo.library.unt.edu/tdrc/reports/finalrept-contents.html
• Should governments take any steps to boost exports?
  • http://www.economist.com/economics/by-invitation/questions/should_governments_take_any_steps_boost_exports
• US trade deficit Widens, WSJ, Aug 11, 2010 

 

Week 13

Topics:

• Foreign Exchange rates

Additional: Financial crisis

 

Readings:

• Schularick, Moritz. 2010. "The End of Financial Globalization 3.0," The Economists' Voice: Vol. 7 : Iss. 1, Article 2.
• Altman, Roger C. 2009. "The Great Crash, 2008: A Geopolitical Setback for the West." Foreign Affairs 88, no. 1: 2-14.
• Eichengreen, Barry. 2009. "The Dollar Dilemma." Foreign Affairs 88, no. 5: 53-68.
• James, Harold, 2009, Fixing Global Finance. Foreign Affairs, Jan/Feb
• Reinhart, Carmen M., and Kenneth S. Rogoff. 2008. "Is the 2007 US Sub-prime Financial Crisis So Different? An International Historical Comparison." American Economic Review, 98(2): 339–44.

 

Week 14

Topics:

• International monetary arrangements and financial institutions (IMF, WB)

Additional: Foreign aid

 

Readings:

• Mallaby, Sebastian, 2004, The World’s Banker, The Penguins Press. (Preface and Ch 1).
• Easterly, William. 2006. The white man's burden: why the West's efforts to aid the rest have done so much ill and so little good. New York: Penguin Press. Chapter 6
• Easterly, William 2003. "Can Foreign Aid Buy Growth?" Journal of Economic Perspectives, 17(3): 23–48.
• Easterly, William, and Tobias Pfutze. 2008. "Where Does the Money Go? Best and Worst Practices in Foreign Aid." Journal of Economic Perspectives, 22(2): 29–52.
• Easterly, William, 2007, Development Success: May History Breed Humility, in Ricardo Ffrench-Davis and José Luis Machinea (eds.) Economic Growth with Equity Challenges for Latin America (Palgrave MacMillan).
• Rajan, Raghuram G. 2008. "The Future of the IMF and the World Bank." American Economic Review, 98(2): 110–15.

 

Week 15 Final examination period

Final paper and final presentation

In class activities/assignments:

Presentation

Final paper due