Module Lead: Facundo Albornoz
Introduction and module objectives:
This course will analyse the causes and consequences of trade policy. It will then investigate the motives for nations or group of nations to restrict or regulate international trade and study the effects of such policies on economic welfare. We will also spend some time discussing aspects of the different ways of trade integration such as custom unions, preferential trade agreements, as well as the pros and cons of unilateral policies pursued by individual countries, regionalism and multilateralism.
Although the course will emphasize the understanding of past and current use of active trade policy, we will rely on formal economic modelling to help us understand these events. We will mainly use general equilibrium models and when needed adopt a partial equilibrium setting. Classes will provide some training on such analytical tools.
Topics covered: What is trade policy?; Infant industry protection; The effects of trade policy; Tariff effects in small and large countries; Regionalism versus Multilateralism; Trade and Inequality; The Political Economy of Trade Policy.
By the end of the module students should be able to:
- Critically evaluate the various arguments for and against trade policy in terms of their welfare implications;
- Use different advanced theoretical models to demonstrate the welfare effects of trade and integration policies motivated by both strict economic and political economy factors;
- Examine in depth the theoretical predictions of traditional trade theories in light of the outcomes arising from globalisation, particularly as they relate to developing countries;
- Evaluate the complex empirics underlying the political economy of trade policy.
- One hour class test (20%)
- Two hour examination (80%)