Global Economics I


The course introduces international trade and factor flows theory, as well as to related empirical studies, using standard microeconomics tools to analyze economic interactions between countries. Topics to be covered include: determinants of the level and composition of trade between countries; consequences of trade on consumer welfare and income distribution; effects of tariffs, quotas, and other trade policies; causes and consequences of international labor migration and foreign direct investment. Students taking this course should be able to understand, with a critical view, trade, immigration and FDI policies in an open economy.

General characterization





Responsible teacher

Luís Campos e Cunha


Weekly - Available soon

Total - Available soon

Teaching language



Mandatory Precedence:

- 1102. Microeconomics


Suggested textbook: [FT] R. Feenstra and A. Taylor, International Economics, 3rd/2nd edition, Worth. Other relevant sources: [HM] Husted Steven and M. Melvin, International Economics, 8th edition, Pearson. [CFJ] Caves Richard, J. Frankel and R. Jones, World Trade and Payments, 10th edit, Pearson International Edition. [HS] Heffernan, S. and Sinclair P. Modern International Economics, 1990, Blackwell. [KO] Krugman and Obstfeld, International Trade, theory and policy, 9th edition, Pearson. [BPS] Bhagwati Panagariya and Srinivasan, Lectures on International Trade, 2nd, MIT Press.

Teaching method

A.    Knowledge and Understanding
Students   taking   this   course   should   be   able   to   understand,   with   a    critical view, international trade policies and other economic policies in an open economy. These might come from international agreements as well as from the EU or national levels.

B.    Subject-Specific Skills
Intermediate microeconomics, including general equilibrium and welfare. Math knowledge at that level.

C.    General Skills
Being able to think in general equilibrium.

Evaluation method

Final Grade = 30% Midterm Exam + 50% Final Exam
+ 20% Problem Sets and Class Participation

•    Midterm and final exam are both mandatory.
•    Final exam is comprehensive of all the contents taught in the course.
•    Minimum final exam grade requirement of 8.0, and course passing grade of 9.5.
Important Assessment Dates
•    Midterm:      TBD
•    Final Exam: TBD
•    Resit Exam: TBD

Doing the final exam in the regular period
•    If you have a reason, validated by the pedagogical council, for having missed the midterm, you may take the final exam in the normal period for 80% of the grade. 20% of the final grade will still correspond to problem sets and class participation.
•    Students who are just improving their grade are  entitled  to  take  the  final  exam  in  the regular period for 100% of the grade.
•    Otherwise, in normal circumstances, your final exam will amount to 50% of your final grade.
Doing the exam in the resit period
•    Following the rules of the university, you can do the resit exam (for 100% of the grade) if you did not pass the course through regular assessment. Note you must enroll for this exam in the undergraduate office.
•    Students who are just improving their grade are entitled to take the resit exam for 100% of the grade.
•    If you do not attend the final exam in the regular period, your resit exam will count 100% of the course grade.
Problem sets and class participation
•    There will be weekly problem sets to be solved and handed in before the tutorial sessions. The three worst problem sets will not be included when computing the average problem set grade.
•    Class participation includes students’ contributions to class discussion both in lectures and tutorials as assessed by the lecturer and teaching assistant.

Subject matter

This course outline is a guide to the general nature and order of the topics covered in the course. Some  variation  may  occur.  Additional  readings to  the  textbook will  be  posted  in   the course Moodle webpage.
I    – Introduction to International Trade
[FT chap 1]
Bernard et al. (2007)

II    – The Ricardian Model
[FT chap 2]

III    – The Specific Factors Model
[FT chap 3]
Bernhofen and Brown (2004)

IV    – The Heckscher-Ohlin Model
[FT chap 4]
Krugman (2008)
Schott (2003)
Batista and Potin (2014)

V    – Movement of Labor and Capital between countries: International Labor Migration and FDI
[FT chap 5]
Freeman (2006)
Batista (2008)
Batista and McKenzie (2018) Bah and Batista (2018) Clemens (2011)
McKenzie and Yang (2014) Docquier, Ozden, and Peri (2014)

VI    – Increasing Returns to Scale and Monopolistic Competition
[FT chap 6]
Helpman (1999)
Krugman (2009)
Arkolakis, Costinot and Rodriguez-Clare (2012)

VII    – Offshoring of Goods and Services
[FT chap 7]
Markusen (1995)
Feenstra and Hanson (1999) Melitz (2003)

VIII    – Import Tariffs and Quotas under Perfect Competition
[FT chap 8]
Amiti et al. (2019)
Harrigan and Barrows (2009)

IX    – Import Tariffs and Quotas under Imperfect Competition
[FT chap 9]
Amiti et al. (2019) Feenstra (1989)

X    – Export Subsidies in Resource and High-Technology Industries [Time permitting]
[FT chap 10]

XI    – International Agreements: Trade, Labor and the Environment [Time permitting]
[FT chap 11]


    Programs where the course is taught: