International Trade


The course is on International Trade theory and policy. The first part is dedicated to positive economics, in explaining trade flows, international specialization and factor allocation. The second part is on welfare economics. There it is covered optimal policies under various circumstances. Then the course focus goes into open economy policies. The level of the course is considered intermediate, as many students were never took a trade course. Some inroads will be taken towards more advanced technics.

General characterization





Responsible teacher

Luís Manuel Moreira Campos e Cunha


Weekly - Available soon

Total - Available soon

Teaching language





Several papers will be referred during the course.

[HM] Husted, Steven and M. Melvin, International Economics, 8th edit, Pearson.

[FT] R. Feenstra and A. Taylor, International Economics, 2nd edit, Worth.

[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, 8th edt, Pearson.

[BPS] Bhagwati, Panagariya and Srinivasan, Lectures on International Trade, 2nd edition, MIT Press.

Teaching method

I will teach (almost) all classes. Students are encouraged to select a topic to be presented in class. The Grader may teach one or two classes for solving some of the exercises that will be given to students along the course.

Evaluation method

The grade is based on a mid-term (1/3) and a final exam (2/3). Students are encouraged to present a topic of choice to be presented in class and that is extra credit. A small paper is also acceptable and encouraged. Again, this is extra credit.

Subject matter

0 - Review of Microeconomics: General equilibrium and welfare; Pareto-optimal conditions. Varian, Hal, Intermediate Microeconomics, a modern approach, Norton, 8th edt, chapter 31 or, Perloff, James, Microeconomics with Calculus, Pearson, 2nd edition, chapter 10.

  • I-Introduction:

    [FT chap 1] or [HM chaps 1 and 2] or [CFJ chap 1] or [KO chap 1] or [HS, chap1]

  • II-Commodity Trade without production:

    [HM chaps 1, 2] or [CFJ chap 2]

  • III-The Classical Model of Trade:

    [FT chap 2] or [HM chaps 4] or [CFJ chap 6] or [KO chaps 4,3,app5] or [HS, chap 2]

  • IV-The Neo-classical trade Model (2X2X2):

    [FT chap 4] or [HM chaps 3-4] or [CFJ chaps 4and 6] or [KO chaps 4,3,app5]

  • V-Modern Trade Models: Scale Economies and Imperfect Competition.

    [FT chap 6] or [HM chaps 5] or [CFJ chaps 7 and 12] or [KO chap 6] or [HS, chap 2] or [HS, chap 4]

  • VI-Empirical Tests:

    [HM chap 5] [KO several sections]

  • VII-Specific Factors Model:

    [FT chap 3] or [HM chap 4] or [CFJ chap 5]

  • VIII-Gains from Trade and Income Distribution:

    [HM chap 6] or [CFJ chap 2] or [KO chap 4]

  • IX-Tariffs and Other Policy Instruments:

    [FT chap 8] or [HM chaps 6 and 7] or [CFJ chap 10] or [KO chap 8] or [HS, chap 3]

  • X-Optimal Policies under Distortions:

    [HM chap 7] or [CFJ chap 11] and [BPS chap 28] or [KO chap 9]

  • XI-Immiserizing Growth:

    [HM chap 10] or [CFJ chap 3] and [BPS chap 29]

  • XII-International Factor Mobility:

    [HM chaps 10] or [CFJ chap 9] or [KO chap 7]