module specification

This module introduces students to the fundamental aspects of the theories of international trade and finance, policy analysis and the controversies that surround these activities. It will examine the costs and benefits of these two fundamental activities in the global economy and consider the extent to which government policies in these areas can improve economic outcomes. The module will draw on up-to-date analyses and empirical studies and will examine theoretical and contemporary policy issues in this regard in the international economy.

The module also aims to develop a number of transferable skills of students, e.g. oral and written communication skills, research, quantitative, analytical and problem-solving skills.

• The division of labour and the gains from trade. From Mercantilism to Absolute advantage to Comparative advantage. Ricardian model. Terms of trade. Empirical evidence.
• Resources and trade. Heckscher-Ohlin model: Factors and factor price equalization. Dutch disease. The Leontief paradox. Income distribution. Stolper-Samuelson theorem. Rybczynski theorem. Immiserising growth.
• Imperfect competition and intra-industry trade. Economies of scale and the international location of production. International product life cycle. Overlapping demands theory.
• Barriers to international trade and financing. Tariffs and non-tariff barriers: Import quotas. VERs. Subsidies and Dumping. Embargoes. FX controls. Technical barriers. Domestic content requirement.
• Trade blocs: trade discrimination, trade creation vs trade diversion
• Balance of Payments and Trade Policy
• Exchange rate determination. International capital Flows. Exchange rate management. Uncovered interest parity. Purchasing Power Parity. Monetary approach. Fixed vs floating exchange rate regimes.
• GATT and the WTO.
• Controversies in trade policy.

Teaching is structured around a lecture (2 hour) and a seminar (1 hour) session per week. Lectures will introduce some key topics, concepts and theories, with focus on international trade and finance. Each lecture session will be given a clear context and will then introduce new concepts, ideas and applications. This is an effective way for students to discover the interactive nature of international economics theory, and to explore international trade and finance concepts in real world issues and problems. Lectures are designed to be lively and interactive. Students are encouraged to take part in thought-provoking debates and discussions. Participating in debates, in conjunction with note taking, reinforces students’ understanding of international economics topics and help improve their oral communication and analytical skills.

Seminars will provide an opportunity for students to discuss theoretical and contemporary international trade and finance problems based on the lecture topics. For each seminar session students are given a set of questions and other activities. Students are expected to complement 'formal' learning activity with further reading and research, and prepare the answers to the seminar questions before attending their seminar. The emphasis is on student participation and engagement. These sessions are designed to strengthen students’ abilities to discuss and solve realistic international problems using economic analysis, provide an economic interpretation of empirical findings, evaluate international policy issues and develop peer learning through participation.

On successful completion of the module, students will be able to:

1. understand the fundamental aspects of the theories of international trade and finance, policy analysis and the controversies that surround these activities.
2. critically evaluate international economic policies, processes and relations
3. apply analytical and quantitative techniques to critically assess international economic policies, processes and relations

There will be one piece of summative assessment for this module – an unseen exam. The final exam will last two hours and will assess the knowledge, understanding and application of the concepts, theories and policies covered in the module.

As well as the summative assessment described above, there will be a number of formative assessments with instant formative feedback to monitor student progress and to help students prepare for the final exam.

Formative Assessment during the module will involve:
• In-class questioning and problem-solving activities during lecture time
• Seminar questions /exercises and self-evaluation at the end of each class.
• Students acting as learning resources for one another through in-class discussion and working in small groups

Core Texts

Pugel, T. A. (2019) International economics 17th Ed., McGraw-Hill Education

Sawyer, W. C. and Sprinkle, R. L. (2020) Applied International Economics 5th Ed., Routledge

Other Texts

Gerber, J. (2017) International Economics 7th Ed., Pearson

Husted, S.L., Melvin, M. and Rakshit, A. (2013) International economics 9th Ed., Pearson

Krugman, P. (2018) International Economics: Theory and Policy 11th Ed., Pearson

Krugman, P. R., Obstfeld, M. and Melitz, M. J. (2018) International finance: theory and policy 11th Ed., Pearson

https://londonmet.rl.talis.com/modules/fe6053.html