INTB 334: INTERNATIONAL TRADE Textbook: Instructor: Office: Office Hours Telephone: E-mail: TA E-mail: Website Blog: Fax:

Objectives: International Economics, Husted and Melvin, Addison Wesley Longman Dr. Shawkat Hammoudeh Pearlstein near Starbucks coffee To be determined in class and by appointment (215) 895-6673 (voice mail is available). Email is preferred. hammousm@drexel.edu; Shawkat.hammoudeh@yahoo.com. (preferred) sarafrazi@gmail.com (Soodabeh Sarafrazi) http://faculty.lebow.drexel.edu/hammoudehs/intb_334.htm blogs.zawya.com/shawkat.hammoudeh (215) 895-6975 An understanding of Basic theories of international trade Social impacts of commercial policies Foreign exchange markets Mid term Final exam Homework Participation 40% (5th week) 45% 10% (penalty on late submissions!) 5%

Grading:

Grading Scale Letter grades for the course will be determined as follows:

A+ 95 - 100% A AB BC CD 90 - < 95% 88 - <90% 80 - < 86% 78 - <80% 70-76% 68- < 70% < 68%

B+ 86 - <88%

C+ 76- < 78%

Academic Honesty

In order to protect and maintain a superior learning environment at LeBow College of Business, all students must review and adhere to Drexel Universitys Academic Honesty Policy. For details, see: http://www.drexel.edu/studentlife/studenthandbook/Handbook.html (see Code of Conduct under Judicial Affairs) Forms of academic dishonesty include plagiarism, fabrication, cheating, and academic misconduct. Students are responsible for the authenticity of material submitted both for individual and group work.

The Hagerty Library offers a brief online tutorial for recognizing and avoiding plagiarism at: http://www.library.drexel.edu/resources/tutorials/plagiarism/plagiarism.html

Any violation of the University conduct will be reported and those involved may receive an F in the course.

Reading schedule: (Tentative) Chapter 1&2 Description Introduction Tools of analysis for Intl Trade Models 3 The Classical Trade Model Absolute and Comparative Advantage HW # 1 (problems 1 & 2 in HW file) 4 The Heckscher- Ohlin Trade Model Characteristics of countries and products (HW # 2 Case 1 and exercise 6 at end of chapter 3 in the textbook). 5 Tests and Alternative Theories of Comparative Adv. MacDougalls Test Leontiefs Test Intra-industry Trade Increasing Returns (HW # 3) Midterm Commercial Policies Tariffs (HW #4)

7 & 8 Nontariff Barriers & Protection Quotas, subsidies and dumping

http://news.bbc.co.uk/1/hi/business/4747186.stm

(HW # 5) Commercial Policy: History & Practice 9 12 Preferential Trade Arrangements (tentative) The Balance of Payments (tentative)

INTB 334 Homework Assignments

HW#1: ABSOLUTE AND COMPARATIVE ADVANTAGE (chapter 3) 1. Suppose there are two countries and two goodsCountry S Grapes Honey 10 labor hrs/unit of output 2 Country F 12 5

a. Which country has an absolute advantage in grapes? In honey? b. Can the countries specialize according to absolute advantage? Why? If not , can they specialize on the basis of comparative advantage? If so, why? c. Specify the directions of comparative advantage. d. What are the per unit of output gains/losses from specialization in this case? 2. Suppose the $ absolute prices of G and H in both countries are: Country S Grapes Honey $20 per unit of output $4 Country F $36 $15

a. Calculate the pretrade relative price of G in terms of H. Relative price of H? b. Which country has a comparative advantage in G? In H? Remarks: 1. The above two questions are not related. No information should be taken from one question and used in the other. 2. In question 2, the variables are pries and are measured in dollars. Relative efficiencies cannot be calculated in this case.

INTB 334 Homework Assignments HW# 1: THE CLASSICAL MODEL:ABSOLUTE AND COMPARATIVE ADVANTAGE (Continued)

Please do the following exercises from the Text P 76: Ex. 1 Case 1 only P 77: Ex 6. Place good S on the horizontal axis. The fact that the autarky PS/PT increased from 5/4 to the ITOTS = 2 gives an indication of where the comparative advantage lies. Please use this information when you solve this exercise.

INTB 334 Homework Assignments

HW # 3: TESTING THE CLASSICAL MODEL(chapter 5)

Two countries: Italy and Greece producing olives Italy Output: 120 units Labor : 30 workers Wages: $3 Exports: $100 Greece Output: 60 units Labor: 30 workers Wages: $2 Exports: $50

A real word comparative advantage for Italy over Greece in olives is measured by a ratio of Italian exports of olives to Greek exports that exceeds one. Calculate this ratio and consider it the real world. Determine the comparative advantage according to the classical model. Is the classical models prediction of comparative advantage consistent with the comparative advantage in the real world given by the above example? Hint: Calculate relative productivity and relative wage.

HW #4: TARIFFS (chapter 6) Homework Assignment. (Chapter 6: Tariffs) Please do the following additional exercises from the Text P 178: Ex. 7 P 179: Ex 17. HW# 5: NON TARIFF BARRIERS

Please do the following exercise from the Text P 213: Ex. 9. HW# 6: THE FOREIGN EXCHANGE MARKET

Please do the following exercises from the Text P 352: Ex. 2 and 3.