International Trade Theory 7.5 credits

The aim of the course is to provide the student with basic knowledge and skills in international trade theory. The course helps the student understand the theoretical basis for the following issues: the gains from trade, how patterns of trade are determined, the effect of growth on trade, and the impact of various trade policies. The course also helps the student consider how trade theory may be applied to various real-world issues. Important elements of the course include the following: - Comparative advantage and the Ricardian Model, - Income distribution and the Specific Factors Model, - The resource endowment basis for trade patterns and the Heckscher-Ohlin Model, - Terms of trade and its determinants, - The effect of growth on trade, - The inclusion of economies of scale and imperfect competition in international trade theory, - The impact on trade of various international institutions and agreements on trade, such as the EU, NAFTA, GATT, and WTO. **Connection to Research and Practice** The course provides an overview of the theoretical literature on trade theory referring to various articles published in leading academic journals. This literature is, in addition, complemented by recent empirical studies measuring the causal effects of changes in trade policies around the world. The provided literature will help students to gain first insights into economic research. Since trade implies general welfare benefits but can also lead to large redistribution between countries and within a country, trade policies are highly relevant. We will apply the theories, that are discussed in the course, to evaluate past and recent trade policies.