International Economics

INTERNATIONAL ECONOMICS (3 SCU)

Syllabus & Reading List

 This course presents rudiments in trade theory and open macroeconomics.  Reflecting recent progress in the ASEAN, the WTO and Indonesian economy, the emphasis will be on the interactions between rigorous economic thinking and concrete policy issues in developing countries.  Besides that the material of subyect are international trade theory, economic integration, exchange rate system, balance payments and current issues on Indonesian economic.

Download : Model of Trade.pdf

Teaching methods :

•  Classroom
•  Simulation
•  Discussion
•  Observation
•  Critical Analisize

The textbook for this course is:

• Paul R. Krugman and Maurice Obstfeld, International Economics:  Theory and Policy, 6^th edition, Addison-Wesley, 2002. (K-O)

As supplementary books:

• R.E. Caves, J.A. Frenkel and R.W. Jones, World Trade and Payments, Harper Collins. (C-F-J)
• Imam Mukhlis, Ekonomi Integrasi dalam Perspektif Teori, Cahaya Abadi, Tulungagung, 2009
• Imam Mukhlis, Integrasi Ekonomi ASEAN, Cahaya Abadi, Tulungagung, 2010

 At a more advanced level, consult:

• J. N. Bhagwati, A. Panagariya and T. N. Srinivasan, Lectures on International Trade, 2^nd edition, MIT Press, 1998. (B-S)
• M. Obstfeld and K. Rogoff, Foundation of International Macroeconomics, McGraw-Hill, 1996.  (O-R)

 The Materials :

• I. Introduction
• II. The Traditional Theory of International Trade
• III. New Theories of International Trade and Industrial Policies
• IV. Political Economy of Trade Disputes, the FTA and the WTO
• V. Economic Integration
• VI. ASEAN Economic Integration
• VII.  The Balance of Payments and National Accounts
• VIII. Determinants of Exchange Rates
• IX. The Exchange-Rate Regime Choice and a Common Currency Area
• X. International Debt and Currency Crises
• XI. The Role of the IMF and other International Financial Organizations

 Competences

• Understanding about theoretical perspective on international economic
• Improving knowledge about current issues in international economic
•  Critical analysize of problem in Indonesian economic on international economic

 A.Core Competence

• Student Know about theoretical perspective on International Economics
• Student understand current issues from International Economics
• Student can explain problems on Indonesian Economics through Asean Economic Integration

 B.Additonal Competence

• Student can formulate the way success on International Economic
• Student can identified a kind of anything about Internartional Economic on Indonesian Economy

 

PART I – REAL TRADE THEORY

I. Introduction

• C-F-J, Chapter 1
  Bhagwati, Jagdish, Arvind Panagariya and T. N. Srinivasan. “The Muddles Over Outsourcing.” Journal of Economic Perspectives, Vol. 18, No. 4, Fall 2004, pp. 93-114.
  Samuelson, Paul. 1971.  “An Exact Hume-Ricardo-Marshall Model of International
  Trade.” Journal of International Economics, 19:1, pp. 1-18.

II.  Traditional Theory of International Trade

• (1) The Basic Trade Model

K-O, Chapter 2 and 3 with appendix and post-script
C-F-J, Appendix, Chapters 2-4
*Dornbusch, Fischer and Samuelson, “Comparative Advantage, Trade and Payments in a Ricardian Model with a Continum of Goods,” AER, 1977

• (2)  Structure of 2 factor – 2 sector economy

(Heckscher-Ohlin Model)
K-O, Chapter 4
C-F-J, Appendix, Chapters 5-7

• (3) Effects of Tariffs and Quotas

K-O, Chapter 9
C-F-J, Appendix, Chapters 11-12

• (4) Theory of Factor Movements

K-O, Chapter 7
*Baier, Scott and Bergstrand, Jeffrey H. (2001), “The Growth of World Trade: Tariffs, Transport Costs, and Income Similarity.” Journal of International Economics 53, 1-27.  (An application of Gravity Model to estimate what factors boosted trade.)
*Frankel, Jeffrey A. and Romer, David (1999), “Does Trade Cause Growth?” American Economic Review 89, 379-99. (An examination of the correlation between trade and income.)

III.  New Theories of International Trade and Industrial Policies

• (1)  Increasing Returns, Product Differential and Imperfect Competition

*Dixit & Norman, Theory of International Trade, Cambridge, 1980,
Chapter 9
K-O, Chapter 6
B-S, Chapters 8 and 26
Helpman and Krugman, Market Structure and Foreign Trade, MIT Press, 1985.

• (2) Political Economy of Protection and Industrial Policy

K-O, Chapters 10, 11, 12
*Brander and Spencer, “Export Subsidies and International Market Share Rivalry,” JIE 18, 1985.

IV.  The Political Economy of Trade Disputes, the FTA and the WTO

• K-O, Chapters 8-9

Claude Barfield, Free Trade, Sovereignty, Democracy: The Future of the World Trade Organization, Washington, D.C.: AEI Press, 2001, Chapters 1, 2, 4.
*Bagwell and Staiger, “The WTO as a Mechanism for Securing Market Access Property Rights,” JEP, Vol. 15, No. 3, 2001.
Robert Feenstra, “Estimating the Effects of Trade Policy,” Chapter 30 in Handbook of International Economics, Vol. 3, edited by Gene Grossman & Kenneth Rogoff, North-Holland, 1995.

V.Economic Integration

• I-M, Chapter 1,2,3

VI. ASEAN Economic Integration

• I-M, Chapter 1, 3,4

Mid-term exam

.

PART II OPEN MACROECONOMICS

.

VII.   The Balance of Payments and National Account

• K-O, Chapter 13

VIII.  Determinants of Exchange Rates

P. Isard, Exchange Rate Economics, Cambridge University Press, 1995.
*K. Froot and R. Thaler, “Foreign Exchange,” JEP 4, 1990, 179-92
*J. Frankel & A. Rose, “Empirical Research on Nominal Exchange Rates,” Chapter 33 in Handbook of International Economics, Vol. 3, edited by Gene Grossman & Kenneth Rogoff, North-Holland, 1995.

• (1) Purchasing Power Parity

K-O, Chapter 16
*R. Dornbusch, “Purchasing Power Parity,” in The New Palgrave, Vol. 3.

• (2)  Sluggish Price and Overshooting Exchange Rate Model

K-O, Chapter 15 with Appendix
*R. Dornbusch, “Expectations and Exchange Rate Dynamics,”  JPE, Vol. 84, No. 6, 1976.

• (3)  Effect of Interventions in the Foreign Exchange Market

K-O, Chapter 18

IX.  The Exchange-Rate Regime Choice and a Common Currency Area

• (1) Policy Assignment Problems

K-O, Chapters 17 and 20

*Robert Mundell, “Capital Mobility and Stabilization Policy Under Fixed and Flexible Exchange Rates,” Canadian Journal of Economics and Political Science, Vol. XXIX, No. 4, No. 1963.

• (2)  International Policy Coordination

K-O, Chapter 20

*R. Cooper, “Economic Interdependence and Coordination of Economic Policies,”  Handbook of International Economics, Vol. II, 1985.

*K. Hamada, “A Strategic Analysis of Monetary Interdependence,” JPE, Vol. 84, No. 4, 1976.

•  (3) Choice of Exchange Rate Regimes

K-O, Chapter 19

Hamada, Political Economy of International Monetary Interdependence, MIT Press, 1985, Chapters 2 and 3.

X.  International Debt and Currency Crises

K-O, Chapter 22 and 23

*J. Sachs, “Managing the LDC Debt Crisis,” Brooking Papers on Economic Activity 2, 1986.

XI.  The Role of the IMF and Other International Financial Organizations

Joseph Stiglitz, Globalization and Its Discontents, New York: W.W. Norton, 2002, Chapters 1-4.

*Frederic S. Mishkin, “Global Financial Instability: Framework, Events, Issues,” JEP, Vol. 13, No. 4, 1999

XII. Simulation on International Economic

XIII. Continue

XIV. Applied of Jigsaw methode to understand the effect of tarrif to welfare

XV. Continue

XVI.Applied of Think Pair Share method to understand effect of economic integration to Indonesia Economy

XVI. Evaluation 

 

Valuation :

1. Existence = 10 %
2. articipation = 10%
3. Duties = 10%
4. Mid examanation = 30%
5. Final Examanation = 40%

 

 

 

 

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