Published Mar 29, 2023
This course explores international trade in goods and services, as well as the international exchange of financial assets. Economic theories will be examined, which help explain how international transactions affect the world's economies. Topics include the theory of comparative advantage and the gains from trade, tariff theory, concepts and measurement of balance of payments, exchange rate systems, and the international monetary system.
Prereq: ECON 101 or ECON 100/COMM 103; ECON 102
The main objective of this course is to introduce students to the critical economic issues that result from a country’s interaction with the rest of the world. That is, trade with other countries, international factor mobility, protectionism versus supranational economic integration, current account imbalances and exchange rate volatility just to name a few.
The course is divided into two parts: i) international trade and ii) international macroeconomics.
In the first part, we examine why countries trade, how international trade and factor mobility affect economies within and across countries in terms of production, employment, consumption, and welfare, and how trade policies can alter the gains from trade.
In the second part, we study the foreign exchange market, its main determinants, as well as macroeconomic policy under floating and fixed exchange rate regimes. We will also discuss the international flow of financial assets in the world economy.
| - Explain the patterns of trade and their determinants. |
| - Understand the distributional consequences of international trade in goods. |
| - Explain the consequences of trade policy: tariffs, quotas, etc. |
| - Understand exchange rates, their definitions, and main determinants. |
Weekly schedule | Topic and Chapters |
| Week 1 | Topic: Course Introduction & World Trade: An Overview Chapters 1 & 2 |
| Week 2 | Topic: Labor Productivity and Comparative Advantage: The Ricardian Model. Chapter 3 |
| Week 3 | Topic: Labor Productivity and Comparative Advantage: The Ricardian Model / Specific Factors and Income Distribution. Chapter: 3 & 4 |
| Week 4 | Topic: Specific Factors and Income Distribution / Resources and Trade: The H-O Model. Chapter: 4 & 5 |
| Week 5 | Topic: The H-O Model / The Standard Trade Model. Chapter: 5 & 6 |
| Week 6 | Topic: The Standard Trade Model. Chapter: 6 |
| Week 7 | Topic: The Standard Trade Model / External Economies of Scale and International Location of Production. Chapter: 6 & 7 |
| Week 8 | Topic: Firms in Global Economy: Export Decisions, Outsourcing and Multinational Enterprises. Chapter: 8 |
| Week 9 | Topic: The Instruments of Trade Policy / The Political Economy of Trade Policy. Chapter: 9 & 10 |
| Week 10 | Topic: Exchange Rates and Foreign Exchange Market: An Asset Approach. Chapter: 14 |
| Week 11 | Topic: Exchange Rates and Foreign Exchange Market: An Asset Approach / Money, Interest Rates and Exchange Rates. Chapter: 14 & 15 |
| Week 12 | Topic: Money, Interest Rates and Exchange Rates. Chapter: 15 |
Krugman, R. Paul, Maurice Obstfeld & Marc J. Melitz: International Economics: Theory and Policy, 11thEdt., Pearson Wesley Publishers Limited, 2018.
https://console.pearson.com/enrollment/bcw0ia
Other References:
Feenstra, C. Robert & Alan M. Taylor, International Economics, 3rdEdt.,Worth Publishers, 2014.
Salvatore, Dominick, International Economics, 11thEdt., John Wiley & Sons, Inc, 2013
| Component | Value |
|---|---|
| Midterms | 40% |
| Quizzes | 20% |
| Final Exam | 40% |
| Midterm 1 | Wed, May 31, 10:00am-11:20am | 20% |
Midterm 2
Quiz 1 Quiz 2 Quiz 3 Quiz 4
| Wed, June 28, 10:00am-11:20am
Monday May 22 -Sunday May 28 Monday Jun 12 - Sunday Jun 18 Monday Jul 03 - Sunday Jul 09 Monday Jul 24 - Sunday Jul 30
| 20%
5% 5% 5% 5%
|
| ||
| Final exam (comprehensive) | (TBD) | 40% |
No assignment screening will be used in this course.
All of us need a support system. The faculty and staff in Arts encourage students to seek out mental health support if they are needed.
On Campus
Due to COVID-19 and campus closures, services are available only online or by phone.
Off campus, 24/7
Full details can be found online on the Faculty of Arts website
Download UWaterloo and regional mental health resources (PDF)
Download the WatSafe app to your phone to quickly access mental health support information.
We acknowledge that we are living and working on the traditional territory of the Attawandaron (also known as Neutral), Anishinaabe and Haudenosaunee peoples. The University of Waterloo is situated on the Haldimand Tract, the land promised to the Six Nations that includes ten kilometres on each side of the Grand River.
For more information about the purpose of territorial acknowledgements, please see the CAUT Guide to Acknowledging Traditional Territory.
All deferred Final Exam requests for economics courses are administered by the Economics Undergraduate Office. Please consult the Deferred Exam Policy at
https://uwaterloo.ca/economics/undergraduate/resources-and-policies/deferred-final-exam-policy.
Academic integrity: In order to maintain a culture of academic integrity, members of the University of Waterloo community are expected to promote honesty, trust, fairness, respect and responsibility. [Check the Office of Academic Integrity for more information.]
Grievance: A student who believes that a decision affecting some aspect of their university life has been unfair or unreasonable may have grounds for initiating a grievance. Read Policy 70, Student Petitions and Grievances, Section 4. When in doubt, please be certain to contact the department’s administrative assistant who will provide further assistance.
Discipline: A student is expected to know what constitutes academic integrity to avoid committing an academic offence, and to take responsibility for their actions. [Check the Office of Academic Integrity for more information.] A student who is unsure whether an action constitutes an offence, or who needs help in learning how to avoid offences (e.g., plagiarism, cheating) or about “rules” for group work/collaboration should seek guidance from the course instructor, academic advisor, or the undergraduate associate dean. For information on categories of offences and types of penalties, students should refer to Policy 71, Student Discipline. For typical penalties, check Guidelines for the Assessment of Penalties.
Appeals: A decision made or penalty imposed under Policy 70, Student Petitions and Grievances (other than a petition) or Policy 71, Student Discipline may be appealed if there is a ground. A student who believes they have a ground for an appeal should refer to Policy 72, Student Appeals.
Note for students with disabilities: AccessAbility Services, located in Needles Hall, Room 1401, collaborates with all academic departments to arrange appropriate accommodations for students with disabilities without compromising the academic integrity of the curriculum. If you require academic accommodations to lessen the impact of your disability, please register with AccessAbility Services at the beginning of each academic term.
Turnitin.com: Text matching software (Turnitin®) may be used to screen assignments in this course. Turnitin® is used to verify that all materials and sources in assignments are documented. Students' submissions are stored on a U.S. server, therefore students must be given an alternative (e.g., scaffolded assignment or annotated bibliography), if they are concerned about their privacy and/or security. Students will be given due notice, in the first week of the term and/or at the time assignment details are provided, about arrangements and alternatives for the use of Turnitin in this course.
It is the responsibility of the student to notify the instructor if they, in the first week of term or at the time assignment details are provided, wish to submit alternate assignment.