CARLETON UNIVERSITY, Department of Economics 
                                   ECON 4601: International Trade Theory and Policy (Winter 2022) 
                 
                Professor: Z. Yu                 Office: A810 Loeb Building;              Email: zhihao.yu@carleton.ca  
                                                                        
                Lectures: In-person 
                Instructor’s Office Hours: TBA 
                TA: TBA 
                 
                OBJECTIVES 
                This is an advanced course in international trade theory and policy. In the first part of the course, 
                several general equilibrium models will be developed. The second part of the course will use this 
                framework to analyse several policy issues, including the effects of tariffs and quotas, and trade 
                liberalisation. Recent topics, such as political economy of trade policy, will also be discussed. 
                 
                PREREQUISITE  
                ECON 2030 (or Econ 2003 – no longer offered) with a grade of C- or higher.  
                 
                TECHNICAL CONTENT  
                This course makes extensive use of theoretical and mathematical techniques from ECON 2030, 
                ECON 2020, ECON/MATH 1401 and ECON/MATH 1402.  
                 
                REQUIRED TEXTBOOK: 
                Paul R. Krugman, Maurice Obstfeld, and Marc Melitz, International Trade: Theory and Policy (Pearson), 
                  th
                11  edition. (or Paul R. Krugman, Maurice Obstfeld, and Marc Melitz, International Economics: Theory and 
                          th
                Policy, 11  edition). Pearson MyLab Economics Course ID: TBA) 
                 
                WEEKLY HOMEWORK:  
                Class attendance and participation are required. I will also provide selected problems from each 
                chapter for you to practice.  Although these exercises will not be formally graded (but Pearson MyLab 
                Economics provides exercises with answers), each week I will randomly collect a few to record your 
                weekly homework.  
                 
                EXAMINATIONS  
                There will be three tests throughout the course.  The first two will be in-class tests, but the 3rd will 
                be a take-home test. The dates of the three tests will be announced/confirmed by the end of 
                January.  
                 
                Important:  (i) You will be accommodated for missing a test only for a documented compelling reason.  You will 
                have to notify the instructor within 24 hours via email, followed by the document (e.g. a doctor’s note) within 
                3 days.  (ii) Furthermore, if you miss a test, the assigned weight will be added to the subsequent test, in that case, 
                you will write a different test that combines the two tests.  A maximum of one missed test is permitted.   
                 
                                                                        
                EVALUATION: 
                Homework and Class participations/attendances: 10% 
                In-class Test 1: 40% 
                In-class Test 2: 40% 
                Take-home Test 3. 10% 
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                                                                   Please be aware that plagiarism is serious offence at Carleton and should be recognized and avoided. For
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                                                                   Academic Accommodation:                                                                                                                                                                                                                  
                                                                   You may need special arrangements to meet your academic obligations during the term. For an accommodation 
                                                                    
                                                                   request, please visit: students.carleton.ca/course-outline  
                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                        COURSE OUTLINE AND REQUIRED READING: 
                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                  Part I International Trade Theory 
                                                                    
                                                                   I.1 Labour Productivity and Comparative Advantage: The Ricardian Model  
                                                                                                                                                                                                                                                                                                                    
                                                                   I.2. The Specific Factor Model and Income Distribution  
                                                                    
                                                                   I.3. Resource and Trade: The Heckscher-Ohlin Model  
                                                                    
                                                                   I.4. Terms of Trade and Gains from Trade  
                                                                    
                                                                   1.5. External Economies of Scale, Imperfect Competition, and International Location of Production  
                                                                    
                                                                   I.6. Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises  
                                                                    
                                                                                                                                                                           Part II: Normative Analysis of International Trade Policy  
                                                                    
                                                                   II.1. Trade Policy (under Perfect Competition)  
                                                                    
                                                                   II.2. Trade Policy: Imperfect Competition and Strategic Trade Policy 
                                                                    
                                                                                                                                                                                Part III: Positive Analysis of International Trade Policy  
                                                                    
                                                                   II.3. The Political Economy of Trade Policy  
                                                                    
                                                                   II.4 Trade Policy in Developing and Developed Countries since WWII  
                                                                    
                                                                   II.5 Controversies in Trade Policy  
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