ECON 8433-001 Topics in Money and International Economics

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ECON 8433-001 Topics in Money and International Economics
Economics 8433 – Seminar in International Economics
Spring 2013, Tuesday & Thursday 9:30 – 10:45 am, Econ 5
Professor Wolfgang Keller, email [email protected], Econ 206C, Tu & Th 11am-12 noon
Course Outline
This is the deparment’s international trade topics course. In contrast to the introductory trade
course which typically provides an overview, some perspective on how the field has evolved,
and an emphasis on theory, this particular course covers a limited number of topics of current
research interest and a roughly equal mix between theory and empirics.
A main objective of this class is to help you identify and get started on your own research. To
this end, the course will involve students, especially through class presentations.
Course Requirements
Classes will consist of lectures by myself, student presentations, and discussion. For each class
meeting, you should read carefully one paper, which is indicated in bold type on the reading list.
Roughly from the third week of class on, there will be student presentations in class. The
respective papers are labeled “Student’s presentation”; these are the papers that everyone
should read carefully for each class.
Your grade will be computed based on the following:
1. 35 minute presentations of research papers, totaling 30% of your grade. Students
should have an organizational meeting during the first week of class to discuss who will
be presenting which paper. Depending on the final enrollment in the class, I expect that
most students will present three papers during the term. This may sound like a lot but
keep in mind that you will need to carefully read the paper anyway, so the additional
work is limited. Plus, it will help you to think about your own research. We will talk
about the sequence of the slides, and what to put into the slides. Please email me your
presentation 4 days before you are presenting so that I can review your slides and give
you feedback to help make the slides clear and of benefit to everyone in the class.
2. Class participation, 20% of your grade. Those who are not presenting should carefully
read the paper that will be presented that day and write-up 3 slides for class discussion.
Slide 1: What is good about the paper?
Slide 2: What is a weakness of the paper?
Slide 3: Ideas for further improvement, or ideas for further research.
After the main presentation I will randomly call on someone to present his/her three
slides. This person will act as the discussion leader while everyone shares their own
ideas on the topic. The idea is to encourage more discussion and class participation in
an environment which is more like a typical econ seminar.
3. A midterm 5-page (double-spaced) draft of your paper proposal and presentation, 20%
of grade. The proposal should motivate a question related to the course and discuss
existing research that is related to that question. The topic may come from the syllabus,
but you may select a topic that is not on the syllabus. The draft should be a minimum of
5 double-spaced pages. Please send me your draft 4 days before your presentation.
4. A final 15-page (double-spaced) draft of your proposal and in-class presentation, 30% of
grade. Ideally this will be the same proposal that you worked on for the midterm
presentation. You should include in your proposal reference to potential data sources
and how these data can be used to address your key questions; aim to be as specific as
you can about your strategy and approach. These presentations will take place during
the last week of class. I will be happy to give you feedback on your slides if you send
them to me in advance.
The final draft is due by Monday, May 6, 1:30pm
Course Outline
This version: January 14, 2013
January 15 - General Introduction; Intro to Foreign Direct Investment (FDI)
Required: Helpman, E., "A Simple Theory of Trade with Multinational Corporations", JPE 1984
Markusen, J., Multinationals and the Theory of International Trade, MIT Press 2002.
January 17 - Horizontal FDI
Brainard, S., "An Empirical Assessment of the Proximity-Concentration Trade-off Between
Multinational Sales and Trade", AER 1997
Required: Helpman, E., M. Melitz, and S. Yeaple, “Exports versus FDI with Heterogeneous Firms”,
AER 2004
January 22 - Offshoring
Required: Keller, W, and S. Yeaple, “The Gravity of Knowledge”, forthcoming, AER
Grossman, G., and E. Rossi-Hansberg, “Trading Tasks: A Simple Theory of Offshoring”, AER 2008
January 24 - FDI versus International Outsourcing
Required: Antras, P., “Trade, Contracts, and Trade Structure”, QJE 2003
Antras, P., and E. Helpman, “Global Sourcing”, JPE 2004
January 29 - Empirics on Offshoring
Student Presentation: Keller, W., and S. Yeaple, “Multinational Enterprises, International Trade,
and Productivity: Evidence from US Firms”, ReSTAT 2009
Javorcik, B., Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In
Search of Spillovers Through Backward Linkages, AER 2004
Hanson, G., and R. Feenstra, "Ownership and Control in Outsourcing to China: Estimating the
Property Rights Theory of the Firm," QJE 2005
January 31 – Trade and Income Gains I: Comparative advantage
Student Presentation: Bernhofen, D., and J. Brown, “An empirical assessment of the
comparative advantage gains from trade: evidence from Japan”, AER 2005
Bernhofen, D., and J. Brown, "A Direct Test of the Theory of Comparative Advantage”, JPE 2004
February 5 – Trade and Income Gains II: Product variety
Student Presentation: Broda, Christian, and David Weinstein, “Globalization and the Gains from
Variety”, QJE 2006
Hersh and H. Joachim Voth, “Sweet Diversity: Colonial Goods and the Rise of European Living
Standards after 1492”, 2009
Keller, W., Ben Li, and Carol Shiue, “China’s foreign trade: Perspectives from the past 150 years”,
World Economy, 2011
February 7: Trade and Scale Economies: Evidence from market access and other studies
Student Presentation: Redding, S., and D. Sturm, “The Costs of Remoteness: Evidence from
German Division and Reunification”, AER 2008
Redding, S, et al. “The Economics of Density: Evidence from the Berlin Wall” CEP Discussion
paper 1154, June 2012
Evenett, S., and W. Keller, “On Theories Explaining the Success of the Gravity Equation”, JPE
Hanson, G., and C. Xiang, “The Home Market Effect and Bilateral Trade Patterns”, AER 2004
February 12 Increasing Returns and Path Dependence
Student Presentation: Bleakley, H., and J. Lin, “Portage and Path Dependence”, QJE 2012
Krugman, P., “Increasing Returns and Economic Geography”, JPE 1991
Fujita, M., P. Krugman, and A. Venables, The Spatial Economy, MIT Press 2001
February 14 – Increasing Returns and Economic Geography
Student Presentation: Davis, D., and D. Weinstein, “Bones, Bombs, and Breakpoints”, AER 2002
Davis, D., and D. Weinstein, “A Search for Multiple Equilibria in Urban Industrial Structure”,
Journal of Regional Science 2008
February 19 – Elements of Trade Costs
Student Presentation: Guiso, L., P. Sapienza, and L. Zingales, “Cultural Biasa in Economic
Exchange?”, QJE 2009
Anderson, J., and E. van Wincoop, “Gravity with Gravitas”, AER 2003
Anderson, J., “Trade Costs”, JEL 2004
Head, K., T. Mayer, and J. Ries, “The Erosion of Colonial Ties after Independence”, JIE 2010
Bronnenberg, B., S. Dhar, and J-P. Dube, “Brand History, Geography, and the Persistence of
Brand Shares”, JPE 2009
Crozet, M., and P. Koenig, “Structural gravity equations with intensive and extensive margins”,
Canadian J Econ 2010
February 21 – Trade gains from firm-level responses I: within vs between
Student Presentation: Trefler, D. , “The Long and the Short of the Canada-US Free Trade
Agreement”, AER 2004
Pavcnik, N., “Trade Liberalization, Exit, and Productivity Improvement: Evidence from Chilean
Plants”, ReStud 2002
Fernandes, A., “Trade Policy, Trade Volumes and Plant-Level Productivity in Colombian
Manufacturing Industries”, JIE 2007
Feb 26 – Trade gains from firm-level responses: technology adoption
Student Presentation: Lileeva, A., and D. Trefler, “Improved access to foreign markets raises
plant-level productivity…for some plants”, QJE 2010
Bustos, P., Trade Liberalization, Exports and Technology Upgrading: Evidence on the impact of
MERCOSUR on Argentinian Firms, American Economic Review, 2011
February 28 – Trade and Growth
Student Presentation: Acemoglu, D., and J. Ventura, “The World Income Distribution”, QJE 2002
Young, A., "Learning by Doing and the Dynamic Effects of International Trade", QJE 1991
Rivera-Batiz, L, and P. Romer, “Economic Integration and Endogenous Growth”, QJE 1991
March 5, 7, and 12: Midterm presentations
March 14 – Knowledge Spillovers and Competition Effects
Student Presentation: Aghion, P., N. Bloom, R. Blundell, R. Griffith, and P. Howitt, “Competition
and Innovation: an inverted-U relationship, QJE 2005
Bloom, N., M. Schankerman, and J. van Reenen , Identifying technology spillovers and product
market rivalry, Econometrica, forthcoming
Acharya, R., and W. Keller, “Estimating the Productivity Selection and Technology Spillover
Effects from Imports”, NBER # 14079
March 19 – Trade and Income Gains III – Trade & Growth
Student Presentation: Feyrer, J. , “Trade and Income – the 1967 to 1975 Closing of the Suez
Canal as a Natural Experiment”, wp, Dartmouth
Feyrer, J., “Exploiting Time Series in Geography”, wp, Dartmouth
Frankel, J, and D. Romer, “Does Trade Cause Growth?”, AER 1999
Rodriguez, F., and D. Rodrik, “Trade Policy and Economic Growth: A Skeptic’s Guide to the CrossNational Evidence”, NBER Macro Annual 2000
March 21 – Gains from trade through institutional change
Student Presentation: Acemoglu, D., S. Johnson, and J. Robinson, “The Rise of Europe: Atlantic
Trade, Institutional Change, and Economic Growth”, AER 2005
Puga, D., and D. Trefler, “International Trade and Institutional Change: Medieval Venice’s
Response to Globalization”, NBER # 18288
March 26, 28: Spring Break
April 2: Trade vs Fundamental Sources of Growth
Student Presentation: Rodrik, D., A. Subramaniam, and F. Trebbi, “Institutions Rule: The Primacy
of Institutions over Geography and Integration in Economic Development”, J Econ Growth 2004
Keller, W., and C. Shiue, “The Link between Fundamentals and Proximate Growth Causes in
Development”, mimeo, 2013
April 4: Trade and Growth with Firms
Student Presentation: Baldwin, R., and F. Robert-Nicoud, “Trade and Growth with
Heterogeneous Firms”, JIE 2008
Burstein, A., and A. Atkeson, “Innovation, Firm Dynamics, and International Trade”, JPE 2010
Costantimi, J., and M. Melitz, “The Dynamics of Firm Level Adjustment to Trade Liberalization”,
in The Organization of Firms in a Global Eocnomy, ed. Helpman, Marin, and Verdier, Harvard UP,
April 9 – Gains and Losses from trade liberalization for specific individuals
Student Presentation: Bloom, N., M. Draca, and J. van Reenen, ” Trade induced technical
change? The impact of Chinese imports on innovation, IT and productivity”, Stanford, 2012
Michaels, G., “The Effect of Trade on the Demand for Skill – Evidence from the Interstate
Highway System”, ReSTAT 2009
April 11 – No meeting
April 16 – Gains and losses from outsourcing for specific individuals
Student Presentation: Hsieh, Chang-tai, and K.T. Woo, The Impact of Outsourcing to China on
Hong Kong's Labor Market.", AER 2005
Hummels, D., et al., The Wage Effects of Offshoring: Evidence from Danish Matched WorkerFirm Data, NBER # 17496
April 18 – Trade and Income Gains within Countries
Student Presentation: Donaldson, D., “Railroads of the Raj: Estimating the Impact of
Transportation Infrastructure”, working paper, MIT
Duranton, G., P. Morrow, and M. Turner, “Roads and Trade: Evidence from the U.S.”, working
paper, University of Toronto
April 23, 25, 30, and May 2: Catch-up meeting and student presentations of own research
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