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Syllabus: Topics in International Economics
Pablo Fajgelbaum
UCLA
ECON 282B, Spring 2016
This is a 2nd year grad course in the International Economics sequence. We will cover standard models that are typically
used in international trade as well as recent applications. You will be graded based on a class presentation of a recent
paper and a referee report on that paper.
Books
Anderson, De Palma and Thisse: Discrete Choice Theory and Product Differentiation (ADT)
Bhagwati, Panagariya, and Srinivasan, Lectures on International Trade (BPS)
Deaton and Muellbauer, Economics and Consumer Behavior (DM)
Dixit and Norman, Theory of International Trade (DN)
Feenstra, Advanced International Trade: Theory and Evidence (F)
Helpman and Krugman, Market Structure and Foreign Trade (KH)
1) Gains From Trade and the Ricardian Model
(BPS), ch.2.
(DN) pp. 2-8, 19-21, 36-43, 65-79, 82-85 and 94-96
(F) pp. 1-5, 179-188
Bernhofen and Brown (2004), “A Direct Test of the Theory of Comparative Advantage: the case of Japan ,” JPE.
Bernhofen and Brown (2005), “An empirical assessment of the comparative advantage gains from trade: Evidence from
Japan,” AER.
Costinot (2009), “On the origins of Comparative Advantage,” JIE.
Deardorff (1980), “The general validity of the law of comparative advantage,” JPE.
Dixit and V. Norman (1986), “Gains from trade without lump-sum compensation,” JIE.
Dornbusch, Fischer, and Samuelson (1977), “Comparative advantage, trade, and payments in a Ricardian model with a
continuum of goods,” AER.
Flam and Helpman (1987), “Vertical Product Differentiation and North-South Trade,” AER.
Matsuyama (2000), “A Ricardian Model with a Continuum of Goods under Nonhomothetic Preferences: Demand
Complementarities, Income Distribution, and North-South Trade.”JPE.
Matsuyama, “Ricardian trade theory,” in the New Palgrave Dictionary of Economics.
2) Factor Proportions and the Ricardo-Viner model
(DN) Ch. 2,4
(F) Ch. 2,3
Bowen, Leamer, and Sveikauskas (1987), “Multicountry, multifactor tests of the factor abundance theory,” AER.
Caron, Fally, and Markusen (2014), “International Trade Puzzles: a Solution Linking Production and Preferences,” QJE.
Costinot and Vogel (2010), "Matching and Inequality in the World Economy," JPE.
Davis and Weinstein (2001), “An account of global factor trade,” AER.
Dornbusch, Fischer and Samuelson (1980), “Heckscher-Ohlin Trade Theory with a Continuum of Goods”, QJE.
Jones (1965), “The structure of simple general-equilibrium models,” JPE.
Jones and Neary (1984), “The positive theory of international trade,” in Handbook of International Economics.
Jones (1971), “A Three Factor Model in Theory, Trade and History,” in Bhagwati, Jones, Mundell and Vanek (eds.), Trade,
Balance of Payments and Growth.
Mayer (1974), “Short-Run and Long-Run Equilibrium for a Small Open Economy,” JPE.
Neary (1978), “Short-Run Capital Specificity and the Pure Theory of International Trade”, Economic Journal.
Stolper and Samuelson (1941), "Protection and Real Wages," REStud.
Trefler (1995), “The case of the missing trade and other HOV mysteries,” AER.
3) Product Differentiation, Monopolistic Producers, and Home Market Effects
(DM), Ch 2,3,5.
(DN), Ch.9
(F), Ch. 5
(KH), Ch. 6-9
(ADT), Ch. 2-5
Dixit and Stiglitz (1977), “Monopolistic Competition and Optimum Product Diversity,” AER.
Fajgelbaum, Grossman and Helpman (2011), “Income Distribution, Product Quality, International Trade,” JPE.
Feenstra and Romalis (2012), "International Prices and Endogenous Quality," QJE.
Hallak, Juan Carlos (2006), "Product Quality and the Direction of Trade," JIE.
Hanson and Xiang (2004), “The Home-Market Effect and Bilateral Trade Patterns,” AER.
Helpman (1999), “The structure of foreign trade,” JEP.
Hummels and Levinsohn (1995), “Monopolistic Competition and International Trade: Reconsidering the Evidence,” QJE.
Krugman (1979), "Increasing Returns, Monopolistic Competition, and International Trade," JIE.
Krugman (1980), “Scale Economies, Product Differentiation, and the Pattern of Trade,” AER.
Markusen (1986), “Explaining the Volume of Trade: An Eclectic Approach,” AER.
Matsuyama (2015), “The Home Market Effect and Patterns of Trade Between Rich and Poor Countries,” manuscript.
Romalis (2004), “Factor Proportions and the Structure of Commodity Trade,” AER.
Schott (2004), “Across-Product Versus Within-Product Specialization in International Trade,” QJE.
4) Gravity, Income Differences, and Measurement of the Gains From Trade
Arkolakis, Costinot and Rodriguez Clare (2011), “New Trade Models, Same Old Gains,” AER.
Anderson and van Wincoop (2003), “Gravity with Gravitas: A Solution to the Border Puzzle,” AER.
Alvarez and Lucas (2007), “General Equilibrium Analysis of the Eaton-Kortum Model of International Trade ,” JME.
Anderson and van Wincoop (2004), "Trade Costs," JEL.
Deardorff (1998), “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassic World?,” NBER.
Eaton and Kortum (2002), "Technology, Geography and Trade," Econometrica.
Fajgelbaum and Khandelwal (2015), "Measuring the Unequal Gains From Trade," QJE.
Ramondo and Rodriguez-Clare (2012), "Trade, Multinational Production, and the Gains from Openness," JPE.
Redding and Venables (2004), "Economic Geography and International Inequality," JIE.
Waugh (2010), "International Trade and Income Differences," AER.
5) Heterogeneous Producers and Competitive Effects
Arkolakis, Costinot, Donaldson and Rodriguez Clare (2011), “The Elusive Pro-Competitive Effects of Trade,” manuscript.
Bernard, Eaton, Jensen, Kortum (2003), “Plants and Productivity in International Trade,” AER.
Bernard, Jensen, Redding and Schott (2007), “Firms in International Trade,” JEP.
Burstein and Vogel (2012), "International Trade, Technology, and the Skill Premium, " manuscript.
Chaney (2008), “Distorted Gravity: Heterogeneous Firms, Market Structure and the Geography of International Trade,”
AER.
Dhingra and Morrow (2012): “Monopolistic Competition and Optimum Product Diversity Under Firm Heterogeneity,”
Eaton, Kortum and Kramarz (2008), “An Anatomy of International Trade: Evidence from French Firms,” NBER.
Feenstra and Weinstein (2010), "Globalization, Markups and the U.S. Price Level," NBER.
Melitz (2003), “The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity,” Econometrica.
Melitz and Ottaviano (2005), “Market Size, Trade, and Productivity.” REStud.
Midrigan, Edmond, and Xu (2015), “Competition, Markups, and the Gains from International Trade,” AER.
Simonovska (2011), “Income Differences and Price of Tradables: Insights from an Online Retailer,” REStud.
Zhelobodko, Kokovin, Parenti, and Thisse (2013), "Monopolistic Competition: Beyond the CES," Econometrica
6) Economic Geography Models
Allen and Arkolakis (2014), "Trade and the Topography of the Spatial Economy," QJE.
Caliendo, Parro, Rossi-Hansberg, and Sarte (2014): “The Impact of Regional and Sectoral Productivity Differences on the
U.S. Economy”
Fajgelbaum and Redding (2014), “External Integration, Structural Transformation and Economic Development: Evidence
from Argentina, 1870-1914,” NBER WP.
Fajgelbaum, Morales, Suarez-Serrato, and Zidar (2015) “State Taxes and Spatial Misallocation,” NBER WP.
Fujita, Krugman and Venables, The Spatial Economy, ch. 4-5.
Helpman (1998), “The Size of Regions", in Topics in Public Economics: Theoretical and Applied Analysis.
Holmes (2014), “An Alternative Theory of the Plant Size Distribution, with Geography and Intra- and International Trade,”
JPE.
Krugman (1991), “Increasing Returns and Economic Geography,” JPE
Krugman and Venables (1995), “Globalization and the Inequality of Nations,” QJE.
Puga (1999), "The Rise and Fall of Regional inequalities," EER.
Redding (2015), "Goods Trade, Factor Mobility and Welfare," NBER WP.
Rossi-Hansberg (2002), “A Spatial Theory of Trade,” AER.
7) Evidence on the Distributional Effects of Trade
Atkin, Faber, Gonzalez Navarro (2016): “Retail Globalization and Household Welfare: Evidence from Mexico,” JPE.
Autor, Dorn and Hanson (2012), “The China Syndrome: Local Labor Market Effects of Import Competition in the United
States,” AER.
Brambilla, Lederman, and Porto (2011), “Exports, Export Destinations, and Skills,” AER.
Bustos (2011), “The Impact of Trade Liberalization on Skill Upgrading: Evidence from Argentina,” manuscript.
Feenstra, R. and G. Hanson (1999), “The Impact of Outsourcing and High-Technology Capital on Wages: Estimates for the
United States, 1979-1990,” QJE.
Goldberg and Pavcnik (2007), “Distributional Effects of Globalization in Developing Countries”, JEL.
Topalova (2010), “Factor Immobility and Regional Impacts of Trade Liberalization: Evidence on Poverty from India,” AEJ.
Verhoogen (2008), “Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector,” QJE.
Faber and Fally (2016): “Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data,”
manuscript.
Porto (2006), “Using Survey Data to Assess the Distributional Effects of Trade Policy,” JIE.
8) Multinationals, Offshoring, and Fragmentation
Antras (2003), "Firms, Contracts, and Trade," QJE.
Antras and Helpman (2004), "Global Sourcing," JPE.
Dixit and Grossman (1982), “Trade and Protection with Multistage Production,” RES.
Fajgelbaum, Grossman, and Helpman (2015), “A Linder Hypothesis for FDI,” RES.
Grossman and Helpman (2002), “Integration versus Outsourcing in Industry Equilibrium,” QJE.
Grossman and Helpman (2005), “Outsourcing in a Global Economy,” RES.
Grossman and Rossi-Hansberg (2008), “Trading Tasks: A Simple Theory of Offshoring,” AER.
Helpman, Melitz and Yeaple (2004), “Exports versus FDI with Heterogeneous Firms” AER.
Hummels, Ishii and Yi (2001), "The Nature and Growth of Vertical Specialiation in World Trade," JIE.
Johnson and Noguera (2011), “Accounting for Intermediates: Production Sharing and Trade in Value Added,” JIE.
Markusen (1984), “Multinationals, Multi-Plant Economies, and the Gains from Trade,” JIE.
Ramondo and Rodriguez-Clare (2013), "Trade, Multinational Production, and the Gains from Openness," JPE.
Yi (2003), “Can Vertical Specialization Explain the Growth of World Trade?” JPE.
9) Exporter Dynamics
Arkolakis (2011), “A Unified Theory of Firms Selection and Growth,” manuscript.
Burstein and Melitz (2011), “Trade Liberalization and Firm Dynamics”
Chaney (2005), "Productivity Overshooting: The Dynamic Impact of Trade Opeing with Heterogeneous Firms."
Das, Roberts and Tybout (2007), “Market Entry Costs, Producer Heterogeneity, and Export Dynamics,” Ecma.
Ederington and McCalman (2008), “Endogenous Firm Heterogeneity and the Dynamics of Trade Liberalization,” JIE
Fajgelbaum (2013), “Labor Market Frictions, Firm Growth, And International Trade,“ manuscript.
Garetto and Fillat (2015), “Risk, Returns, and Multinational Production,” QJE.
Morales (2013), "Gravity and Extended Gravity: Estimating a Structural Model of Export Entry," manuscript.
10) Trade and Labor-Market Frictions
Cosar, Guner and Tybout (2011), “Firm Dynamics, Job Turnover, and Wage Distributions in Open Economy,” manuscript.
Davidson, Martin and Matusz (1988), “The structure of Simple General Equilibrium Models with Frictional Unemployment”
JPE.
Davidson, Matusz and Shevshenko (2008), “Globalization and Firm Level Adjustment with Imperfect Labor Markets," JIE.
Davis and Harrigan (2011), “Good jobs, bad jobs, and trade liberalization” JIE.
Eckel and Egger (2009), “Wage bargaining and multinational firms,” JIE.
Eckel and Kreickemeier (2009), "Firm Heterogeneity and the Labor Market Effects of Trade Liberalization," IER.
Felbermayr, Prat, and Schmerer (2011), “Globalization and labor market outcomes: Wage bargaining, search frictions, and
firm heterogeneity,” JET.
Helpman and Itskhoki (2010), "Labour Market Rigidities, Trade and Unemployment," REStud.
Helpman, Itskhoki, and Redding (2011), "Inequality and Unemployment in the Global Economy," Ecma.
11) Trade and Growth

Factor Accumulation
Acemoglu and Ventura (2002), “The World Income Distribution,” QJE.
Caliendo (2011), "On The Dynamics of the Hecksher-Ohlin Theory," manuscript.
Stiglitz (1970), "Factor Price Equalization in a Dynamic Economy," JPE.
Ventura (1997), “Growth and Interdependence,” QJE.

Learning By Doing
Brezis, Krugman, and Tsiddon (1993), "Leapfrogging in International Competition," AER.
Krugman (1979), “A Model of Innovation, Technology Transfer, and the World Distribution of Income,” JPE.
Krugman (1981), "Trade, Accumulation, and Uneven Development," JDE.
Krugman (1987), "The Narrow Moving Band, the Dutch Disease, and the Competitive Consquences of Mrs. Thatcher,"
JDE.
Matsuyama (1992), “Agricultural Productivity, Comparative Advantage, and Economic Growth,” JET.
Young (1991), "Learning by Doing and the Dynamic Effects of International Trade," QJE.

Innovation and Dynamic Comparative Advantage
Eaton and Kortum (2001), "Technology, Trade and Growth: A unified framework," EER.
Grossman and Helpman (1991), Innovation and Growth in the Global Economy, ch. 7-9.
Grossman and Helpman (1989), "Product Development and International Trade," JPE.
Grossman and Helpman (1990), "Comparative Advantage and Long-Run Growth," AER.
Grossman and Helpman (1991), "Quality Ladders in the Theory of Growth," RES.

Technology Diffusion
Alvarez, Buera and Lucas (2013), "Idea Flows, Economic Growth, and Trade," NBER WP.
Eaton and Kortum (1999), "International Technology Diffusion: Theory and Measurement," IER.
Rivera-Batiz and Romer (1991), “Economic Integration and Endogenous Growth”, QJE.

Trade and Growth with Heterogeneous Firms
Atkeson and Burstein (2010), “Innovation, Firm Dynamics, and International Trade,” JPE.
Baldwin and Robert Nicoud (2008), “Trade and Growth with Heterogeneous Firms,” JIE.
Some Recent Job-Market Papers in Trade Topics
2008
Fieler, Ana Cecilia: "Non-Homotheticity and Bilateral Trade: Evidence and a Quantitative Explanation”
Garetto, Stefania: "Input Sourcing and Multinational Production"
Johnson, Robert: "Trade Prices with Heterogeneous Firms"
Waugh, Mike: "International Trade and Income Differences"
2009
Atkin, David: "Trade, Tastes and Nutrition in India"
Donaldson, Dave: "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure"
Itskhoki, Oleg: “Optimal Redistribution in Open Economy”
Simonovska, Ina: "Income Differences and the Price of Tradables"
2010
Caliendo, Lorenzo: “Estimates of the Trade and Welfare Effects of NAFTA”
Cosar, Kerem: “Adjusting to Trade Liberalization: Reallocation and Labor Market Policies”
Dhingra, Swati: “Trading Away wide Brands for Cheap Brands”
Kovak, Brian: “Local labor market Effects of Trade Policy: Evidence from Brazilian Liberalization”
2011
Bilir, Kamran: "Patent Laws, Product Lifecycle, and Multinational Activity"
Dix-Carneiro, Rafael: “Trade Liberalization and Labor Market Dynamics”
Fajgelbaum, Pablo: “Labor Market Frictions, Firm Growth, And International Trade“
Handley, Kyle: "Exporting Under Trade Policy Uncertainty: Theory and Evidence"
Lu, Dan: “Exceptional Exporter Performance? Evidence from Chinese Manufacturing Firms”
Monte, Ferdinando: “Skill Bias, Trade, and Wage Dispersion”
Morales, Eduardo: “Gravity and Extended Gravity: Estimating a Structural Model of Export Entry”
Sampson, Thomas: “Assignment Reversals: Trade, Skill Allocation and Wage Inequality”
2012
Allen, Treb: “Information Frictions and Trade”
Brooks, Wyatt: "Credit Market Frictions and Trade Liberalization"
Fabinger, Michal: "Trade and Interdependence in a Spatially Complex World"
Fort, Teresa: “Breaking up is hard to do: Why firms fragment production across locations”
Handbury, Jessie: “Are Poor Cities Cheap for Everyone? Non-Homotheticity and the Cost of Living Across US Cities”
Hanlon, Walker: “Necessity is the mother of invention: Input Supplies and Directed Technical Change”
2013
Faber, Ben: “Trade Liberalization, the Price of Quality, and Inequality: Evidence from Mexican Store Prices”
Swiecki, Tomas: “Intersectoral Distortions, Structural Change, and the Welfare Gains from Trade”
Tintelnot, Felix: “Global Production with Export Platforms”
Tonetti, Chris: “Equilibrium Technology Diffusion, Trade, and Growth”
2014
Alviarez, Vanessa: “Multinational Production and Comparative Advantage”
Danziger, Eliav: “Skill Acquisition and the Dynamics of Trade-Induced Inequality”
Dingel, Jonathan: “The Determinants of Quality Specialization”
Gaubert, Cecile: “Firm Sorting and Agglomeration“
Sotelo, Sebastian: “Trade Frictions and Agricultural Productivity: Theory and Evidence from Peru“
Steinwender, Claudia: “Information Frictions and the Law of One Price: When the States and the Kingdom became
United“
2015
Bartelme, Dominick: “Trade Costs and Economic Geography: Evidence from the US”
Hottman, Colin: “Retail Markups, Misallocation, and Store Variety in the US”
Juhasz, Reka: “Temporary Protection and Technology Adoption: Evidence from the Napoleonic Blockade”
Somale, Mariano: “Comparative Advantage in Innovation and Production”
2016
Adao, Rodrigo: “Worker Heterogeneity, Wage Inequality, and International Trade: Theory and Evidence from Brazil”
Bellon, Mathieu: “Trade liberalization and inequality: a dynamic model with worker and firm heterogeneity”
Farrokhi, Farid: “Global Sourcing in Oil Markets”
Lee, Eunhee: “Trade, Inequality, and the Endogenous Sorting of Heterogeneous Workers,”
Lim, Kevin: “Firm-to-firm trade in stick production networks”
Nagy, David: “City Location and Economic Development”
Piveateau, Paul: “An Empirical Dynamic Model with Consumer Accumulation”
Traiberman, Sharon: “Occupations and Import Competition”