Course Details

Subject {L-T-P / C} : HS7404 : International Economics { 3-0-0 / 3}

Subject Nature : Theory

Coordinator : Prof. Bikash Ranjan Mishra

Syllabus

1. Importance of Trade and Trade Theories
Importance of the study of International Economics Inter-regional and international trade Theories of absolute advantage, comparative advantage and opportunity cost Factor Endowments and Heckscher-Ohlin theory of trade — its main features, assumptions and limitations, Empirical studies - Leontief Paradox, Rybzynski effect, Factor price equalization and Stolper-Samuelson Theorem.
2. International Production
Foreign Market Entry Motivations for International Production, Entry Mode Choice, The Rise of Multinational Enterprises and International Production, Foreign Direct Investment and Intra-Firm Trade: Value Chains and Global Production Networks, Firm-specific Assets and Internalization, Intra-Firm Trade, A Cost View of Internalization, Tying Things Together: The OLI Framework, Organizing the MNE, Joint Ventures, The Home Base, Spatial Clusters, Research and Development.
3. International Trade Policy
Concepts of terms of trade and their importance in the theory of trade Free trade versus Protection, Trade restrictions: Tariffs, Effective Rate of Protection and optimum tariff, Non-tariff trade barriers: Import Quotas, Voluntary Export restraints, International Cartels, Dumping, Export subsidies.
4. International Integration
Preferential Trade Agreements, Free Trade Agreements, Customs Union, Common Market and Economic Union The European Union, The North American Free Trade Agreement, Mercosur and the FTAA, ASEAN and AFTA, Regionalism and Multilateralism Rules of Origin, The European Monetary Union at a Glance, Planning the European Monetary Union, Implementing the European Monetary Union, Optimal Currency Areas and Adjustment in the EMU, Recent Crises in the EMU.
5. Exchange Rate
Functions of the Foreign Exchange Market. Equilibrium Exchange Rates. Bilateral vs trade-weighted exchange rate, Cross Exchange Rates, Effective Exchange Rates and Arbitrage. Spot and Forward Exchange Rates, Foreign Exchange Futures and Options, Foreign Exchange Risks, Hedging, Speculation, Overview of Exchange Rate Determination, Fixed versus Flexible exchange rate, Exchange rate Bands, Adjustable Pegs, Crawling Pegs, and Managed Floating.
6. Balance of Trade and Payments
Concepts and components of balance of trade and balance of payments Accounting Principles: Credits and Debits. Double-Entry Book-keeping. The International Transactions of India. Accounting Balances and Disequilibrium in International Transactions. Measuring Deficits or Surpluses in the Balance of Payments. Various measures to correct deficit in the balance of payments Concept and implications of foreign trade multiplier.
7. International Market Institution
The Gold Standard and the Interwar Experience. The Bretton Woods System: its
operation and evolution, The General Agreement on Tariffs and Trade The World Trade Organization Trade in Goods, Trade in Services, Intellectual Property, Dispute Settlement, The Environment, Doha Round. International Monetary Fund: Some Monetary History, The Operation of the IMF, The Political Economy of IMF Lending, An Assessment, Types of Crises, Contagion and Systemic Risk, Analyzing Balance of Payments and Currency Crises, The Asian Crisis,
The IMF Response, The Sub-Prime Crisis of 2007–2009, Basel Standards, Capital Controls.
World Bank: Early History and Administrative Structure, Policy-Based Lending,
Challenges and Responses, Engaging with Ghana, Recent Shifts.
Structural Change and Adjustments, Traded and Non-traded Goods, Internal and External Balance, Traded Goods and Growth, The Order of Economic Liberalization.

Course Objectives

Course Outcomes

1. Identify and analyse different theoretical models of international trade and <br />development in light of ‘real world’ situations. <br />2. Assess the impact of the economies of regional integration and multilateral <br />arrangements. <br />3. Have knowledge of key institutions and important trade policy issues in the <br />international economy

Essential Reading

Supplementary Reading