AECO 23A00 - Economics : Trade and International Finance

Why do so many experts and observers worry about the current race for protectionism triggered by D. Trump? Is globalization detrimental to the middle class? Can we clearly say that Apple is an American brand, an American firm, an American product? Are Multinational Enterprises more powerful than many States? Should we regulate them? Will Trump's protectionism bring jobs back to the USA, or reduce wage inequality? Why is a positive trade balance associated with countries that save a lot? Does China use its exchange rate to boost its economy? Why are financial crises international? What builds the euro zone and makes it last or fail? The course intends to provide students with arguments to answer those questions. It offers the main concepts of an introductory course in international economics, both trade and finance. It introduces students to relevant empirical and theoretical issues of International Economics by keeping connected to contemporary issues raised by globalization.

Sarah GUILLOU,Alexandre LINOTTE

Cours magistral et conférences

English

Autumn 2021-2022

The final exam constitutes 1/3 of the course grade, while the seminar grade constitutes the remaining 2/3 of the course grade. The seminar grade is made of homework (exercises, reading notes, summary of articles, summary of book chapter), presentation of homework in class. The seminar intends to make sure that the most important concepts are assimilated. It also challenges the student to teach the course's concepts themselves to the other students when presenting their homework. Hence an evaluation of their “teaching ability” will be included in the grade. During the 12 seminars, 3 main research questions, chosen at the beginning of the class, will be collectively investigated by using data. Participation in this research will be included in the seminar grade.

Lecture 1 Globalisation, Trade and International relations Why is trade the main vector of globalisation, why is it important? What drives the trade flows: the Gravity equation. Trade wars in the 21st century. Lecture 2 Global Firms and international organizations Who are the main actors of international economy? Lecture 3 Ricardian Models/ Competitiveness as a determinant of Trade Does Germany trade more because it is more competitive? Which country has a comparative advantage in what? Lecture 4 HOS Models/ Factors allowances as determinants of Trade Does China run manufacturing surplus because it has more workers? Is globalisation a cause of wage inequality? Are there losers from globalisation? Lecture 5 New New Trade Theory: Heterogeneous Models Countries do not trade, Firms do. Lecture 6 Offshoring, International Division of Labor Does “made in a single country” make sense? Lecture 7 Unbalanced Trade – Trade Balance Is Trump economically right to blame surpluses' countries? What makes a country in a deficit or surplus position? Lecture 8 Finance Flows, the financial side of the Balance of Payments Why balance of payments tell more about international interdependence than trade balances? Lecture 7 FDI and Tax Competition How firms become global, what drives their location. How tax optimization disturb the balance of payment interpretation. Lecture 10 Exchange rate regimes and policies Fixed and flexible exchange rate -- Monetary Union Does China use its exchange rate to boost its economy? Is the Eurozone an optimal zone ? Lecture 11 Exchange rate determinants and main theories Lecture 12 International Debt – International crisis The global financial market