Introduction to International Economics

Instructor: Joseph Westenberg (jwesten@iu.edu)

Office Hours: T 1:00 - 3:00 PM (or by appointment) in Wylie Hall 244

Class: T & Th 4:00 - 5:15 PM in Ballantine Hall 342

Prerequisites: Intro to Microeconomics (E201) OR Intro to Microeconomics: Honors (S201)

Text: James Gerber’s “International Economics”, Seventh Edition

Course Description

This course provides a moderately in-depth look at some of the major topics in international economics that are quintessential for the economics major. Namely, we begin with a very brief discussion of the history of international trade and economic integration, as well as the major international organizations that support globalization. Then, we will investigate the work-horse models of trade in economics: the Ricardian model, the Heckscher-Ohlin model, and the New Trade theories. These models formalize our intuition about why countries might trade with each other and how trade might affect each country and the individuals residing in each.

We will then spend some time examining the effects of trade policy using the ubiquitous supply-and-demand model, keeping the basic ideas of the previously covered trade models in mind. This includes tariffs, quotas, export subsidies, voluntary export restraints, and a discussion of non-tariff barriers to trade that often come through customs policies or cultural arguments.

Lastly, we will touch on the macro side of international economics. After introducing important definitions, including the current account, capital account, and financial account, we will spend some time discussing exchange rates and their determination.

Course Learning Objectives:

At the end of the course, students should be able to:

• colloquially describe the gains from trade
• defend the idea of gains from trade from common criticisms
• explain how trade can harm some groups within a country
• explain how tax policy can be used to mitigate harm to those groups harmed by trade
• describe the costs associated with various trade policies, such as tariffs
• explain the role of international trade organizations and agreements in trade
• explain the link between the trade balance and investment flows
• use purchasing power parity and interest parity conditions to assess currency values

Course Organization

Students are expected to come to class prepared. This entails reading any assigned material and completing assigned problems before class. Problems will be collected at the beginning of class before instruction begins. Lectures will compliment and facilitate understanding of the read material. Reading is not a substitute for attending class, nor is coming to class a perfect substitute for reading the material. Assignments and readings will be announced in class and posted on canvas.

Course Expectations and Workload

My expectations for you in this class are simple, respect your fellow classemates’ learning environments.That is any behavior that disrupts the learning environment is unacceptable.

You can expect me to come to class each week prepared. I will work my best to help you understand the material. I will be fair and consistent in the grading of all assessments. My goal is to help every one of you understand economics better.

What I expect of you is to work hard to understand all material. If you do not understand the material after studying it, I have an expectation that you will either ask one of your classmates or myself for help. Your classmates can be a valuable resource to you. This is a 3 credit course, so my expectation is standard that you spend 6 hours outside of class studying the material.

Exams

Exams will be either multiple choice, graphical/numerical problems, short essay questions, or a combination of the three. There will be two in-class exams each worth 15% or 75 points of your grade. Those will take place during regular class time on Tuesday, February 11th and Tuesday, March 31st. The final exam is worth 25% or 125 points of your grade and will take place on Tuesday, May 5th from 5:00-7:00PM. If you think that any of your exam questions have been incorrectly graded then you must contact your instructor within 7 days of receiving your exam grade.

Homeworks

There will be 6 homework assignments through the course of the semester. They will consist of multiple choice, short answer, and data related questions. All together the homework will be worth 10% of 50 points of your final grade. The lowest score will be dropped. These will be announced in class and posted on canvas.

Reading Assignments

There will be 6 reading assignments, consisting of reading one or two articles from a major news outlet and reflecting on the issues raised about international economics. They are worth 10% or 50 points of your grade. The lowest score will be dropped. All reading assignments will be available on Canvas along with instructions.

Group Project

There will be a course project, broken into 3-4 parts. Details will be released in upcoming weeks. The project will be worth 15% or 75 points of your grade.

Attendance and Participation

Throughout the semester there will be opportunities to engage with the material during lecture time. Papers from these opportunities will often be collected and used as attendance. There will also be discussions during the class that will give opportunities to participate. Attendance and participation is worth 10% or 50 points of your final grade.

Grades

Make up policy

Built into the course is an extra reading assignment and an extra homework. These are built in knowing that things arise over the course of the semester. There will also be an exam make-up time for excused absences. These absences must be approved by me 48-hours before the exam time begins. Emergencies will be handled on a case by case basis. Illness or injury, family emergencies, certain University-approved curricular and extra-curricular activities, and religious holidays can be legitimate reasons to miss class or to be excused from a scheduled examination.

With regard to family emergencies, you must provide verifiable documentation of the emergency. Given the vast array of family emergencies the instructor will provide precise guidance as to what constitutes adequate documentation. Unless the emergency is critical you should notify the instructor in advance of your absence from the scheduled course event. In cases of critical emergencies, you must notify the instructor within one week of your absence.

For University-approved curricular and extra-curricular activities, verifiable documentation is also required. The student should obtain from the unit or department sponsoring the activity a letter (or class absence form) indicating the anticipated absence(s). The letter must be presented to the instructor at least one week prior to the first absence.

In the case of religious holidays, the student should notify the instructor by the third week of the course of any potential conflicts.

Academic Integrity

As a student at IU, you are expected to adhere to the standards and policies detailed in the Code of Student Rights, Responsibilities, and Conduct. When you submit an assignment with your name on it, you are signifying that the work contained therein is yours, unless otherwise cited or referenced. Any ideas or materials taken from another source for either written or oral use must be fully acknowledged. All suspected violations of the Code will be reported to the Dean of Students and handled according to University policies. Sanctions for academic misconduct may include a failing grade on the assignment, reduction in your final course grade, and a failing grade in the course, among other possibilities. If you are unsure about the expectations for completing an assignment or taking a test or exam, be sure to seek clarification beforehand.

Automatic Withdrawal

The last day to withdraw from the course and receive an automaticWis Sunday, March 15. After this date, withdrawals will only be granted in accordance with University policy. After automatic withdrawal period, withdrawals are only allowed with permission of their dean. These approvals are typically only given for reasons that make it “extremely difficult to drop a class by the Auto-W Deadline or that impede success in a class after the Auto-W deadline.” To qualify for a grade of W after the deadline, a student must be passing the class on the date of withdrawal, if failing, the grade will be an F. More information can be found on the academic advising website.

Accommodations

If you need classroom or testing accommodations for a disability, please contact me outside of class to present the written supporting memorandum of accommodation from the Office of Disability Services for Students. Requests for accommodations for disability must be received and authorized by me in written form no less than two weeks in advance of need, in order to allow adequate time to review and make appropriate arrangements. No accommodation should be assumed until authorized by your instructor.

Important Miscellaneous

• The best way to reach me is via email or office hours. I have found office hours are typically much more efficient for resolving multiple, or longer questions. I will typically respond to emails within 24 hours of regular business hours.
• If you have a conflict with my regular office hours and wish to attend, send me an email and we can most likely find another time to meet.
• Modification of policies may be required during the semester. The instructor will make explicit announcements pertaining to any such changes.

Tentative Topic Outline - Subject to Change

1. Introduction and Institutions
   • USA in a Global Economy
   • International Economic Institutions
2. International Trade
   • Comparative Advantage and the Gains from Trade
   • Comparative Advantage and Factor Endowments
   • Beyond Comparative Advantage
   • Trade Policy
   • Commercial Policy
3. International Trade, Labor, and Environmental Standards
4. International Finance
   • Trade and Balance of Payments
   • Exchange Rates and Exchange Rate Systems