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DIT:MB15
MBA-BM2015-17: Term-V

Dynamics of International Trade
Prof. Biswa Swarup Misra
Credits3
Faculty NameBiswa Swarup Misra
ProgramMBA
Academic Year and Term2016-17
Term-V
1.Course Description
This course will provide students an understanding of how trade impacts economic and social welfare of a country. Apart from discussing various International trade theories which explains the basis of trade, emphasis will be to discuss the welfare implications of various trade policy instruments. The course aims at developing competence of participants to contrast the welfare implications of different policy instruments for small and large countries and in markets characterized by perfect and imperfect competition.The course will make use of game theory to study strategic issues in trade. Students will also gain insights about the international trade framework and issues shaping its contours.

Course Content

Open Economy Macroeconomics, Linkage between National Income accounting and Bop, Twin Deficits, Exchange rate, Fixed and Flexible exchange rate systems, Vent for surplus theory, Export Led versus import substitution led growth strategy, Secular Deterioration Hypothesis, Theory of Immiserating growth, Absolute and Comparative Cost Theory, Opportunity Cost Theory, Heckscher Ohlin Theorem, Factor Price Equalisation Theorem, Rybczynski Theorem, Leontief Paradox, Stopler-Samuleson Theorem, Metzler Paradox, Price versus non price instruments, J-Curve Hypothesis, Welfare Implications of tariffs versus Quota, Zero Sum versus Non zero Sum games, Cooperative versus competitive games, IESDS versus IEWDS, Minimax Theorem, Nash Equilibrium, Import Tariffs and Quotas under Imperfect Competition, Welfare effects of the export quota verus export tariff, High-Technology Export Subsidies, International Trade framework, Evaluation of Efficacy of WTO,Multilateral Trade Agreements, Regional Trade Agreements, Custom Union, Trade Creation versus Trade diversion

2.Student Learning Outcomes

· Be able to understand the trade and development linkages.
· Be able to understand the theories governing international trade
· Be able to distinguish various trade policy instruments and the welfare implications associated with them
· Be able to appreciate the use of game theory to study strategic issues involving international trade
· Be able to understand the international trade framework and the trade agreements shaping the contours of this framework 3.Required Text Book and Reading Material

Latest edition of the following books


1. International Trade - Robert C. Feenstra and Alan M. Taylor
2. International Trade, Theory and Policy -Krugman, Obstfeld&Melitz,
3. International Economics- Cherunilam
4. International Economics - Bo Södersten and Geoffrey Reed
5. International Economics - Salvatore

4.Session Plan

Session-1
Introduction to the Course - Relevance
Open economy Macroeconomics
Linking National Income Accounting with Balance of Payments
Sessions 2-3
The link between Trade and Capital flows
Theory of Twin Deficits- China and US type Twin Deficits
Theory of Exchange Rate Determination
Relative Efficacy of Fixed and Flexible exchange rate systems
Sessions 4
Trade and Development
Vent for surplus theory
Export Led versus import substitution led growth strategy
Secular Deterioration Hypothesis,
Theory of Immiserating growth
Sessions 5-6
Trade Theories
Absolute and Comparative Cost Theory
Opportunity Cost Theory
Factor Endowment Theory-Heckscher Ohlin Theorem
Factor Price Equalisation Theorem
Rybczynski Theorem
Leontief Paradox
Complementary Trade Theories- Stopler-Samuleson Theorem
Metzler Paradox
Sessions 7-8
International Trade Policy- Instruments and Efficacy
Price versus non price instruments
Efficacy of exchange rate as an instrument
J-Curve Hypothesis
Import Tariffs for a Small Country
Import Tariffs for a Large Country
Import Quotas
Welfare Implications of tariffs versus Quota
Sessions 9-11
Game theory to Study Strategic Issues in International Trade
Zero Sum versus Non zero Sum games
Cooperative versus competitive games
Solution concepts
IESDS versus IEWDS
Minimax Theorem
Nash Equilibrium

Sessions 12-15
Import Tariffs and Quotasunder Imperfect Competition
Tariffs and Quotas with HomeMonopoly
Tariffs with ForeignMonopoly
Dumping- Foreign Discriminating Monopolist
Policy Response to Dumping
Antidumping Duties versus Safeguard Tariffs
Infant Industry Protection

Session 16-17

Export Subsidies
Ø Export Subsidies in a Small Home Country- Impact on Home and Foreign welfare
Ø Export Subsidies in a Large Home Country- Impact on Home and Foreign welfare
Ø Case Study on WTO Goals on Agricultural Export Subsidies
Production Subsidies
Ø Effect of a Production Subsidy in a Small Home Country
Ø Effect of a Production Subsidy in a Large Home Country
Export Tariffs
Ø Impact of the Export Tariff on Large Country Welfare
Ø Impact of an Export Tariff in a Small Country on welfaretaking into account the effects on Consumers, producers, and government revenue
Export Quotas
Welfare effects of the export quota with thoseof the export tariff
High-Technology Export Subsidies

Sessions 18-19
International Trade framework -Evolution
A Brief History of the World Trade Organization
Evaluation of Efficacy of WTO
International Agreements: Trade,Labor, and the Environment
The Logic of Multilateral Trade Agreements
Regional Trade Agreements- Custom Union
Trade Creation versus Trade diversion
Are RTAs obstacles to MTAs
International Trade Agreements
International Agreements on Labor Issues
International Agreements on the Environment

Session-20
Emerging Issues in International Trade

5.Evaluation

Quizzes : 25%
Mid Term : 20%
Assignment : 15%
End Term : 40%

6.Academic Integrity

As per Institute’s norms

Created By: Debasis Mohanty on 02/23/2016 at 10:48 AM
Category: BM-II 2015-17 T-V Doctype: Document

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