GOVERNORS STATE UNIVERSITY COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION DIVISION OF ACCOUNTING, ECONOMICS, FINANCE AND MIS ECON 3511: International Economics Spring 2015 Credit Hours: 3 Instructor: Evelina Mengova, Ph.D. E-mail: [email protected] Office: G-195 Phone: 708-534-4964 Office Hours: Monday 2:00 – 4:00 p.m. & Wednesday 1:00 – 4:00 p.m. Class Time and Place: Monday & Wednesday 2:00 - 3:15 p.m.; Room TBA Catalog Description: Investigates international trade theory and commercial policy theory with empirical applications. Also examined are exchange rates and open economy macroeconomics, which include national income accounting and the balance of payments. Extended Description: The course is divided into four main parts. In part I we will see comparative advantage and some theoretical models of international trade, most notable among them the Standard trade model, the Heckscher-Ohlin model and other trade theories. They explain the patterns, determinants and consequences of international trade. Part II covers the tools used by governments to determine and conduct trade policy, such as tariffs and quotas, and their impact on trade volumes and social welfare. Part III is about economic integration, growth and development with international trade, and the movements of international resources and multinational corporations. Part IV focuses on the balance of payments and exchange rates. Prerequisites: The prerequisites for this class are ECON 2301, ECON 2302, and MATH 2281. Intended Audience: This is a required course for students in the BA/BS in Economics, and a selective course for students in the BA in Business Administration, etc.



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Expected Learning Outcomes. After completing this course, the student should be able to: 1. Explain the economic problem of allocating limited resources among competing uses in an economy, given a technological and institutional context. 2. Articulate the elements of classical and modern trade theories, including comparative advantage, absolute advantage, opportunity cost, and intra‐industry trade with product differentiation. 3. Explain tariff- and nontariff- trade barriers, and the political economy of protectionism. 4. Assess the costs and benefits of economic integration. 5. Evaluate global growth and development with international trade. 6. Explain international economic concepts such as exchange rates, foreign exchange markets, and balance of payments. 7. Apply intermediate level quantitative methods used in international economic theory and practice. 8. Analyze current international economic issues and events. Instructional Modality: Lecture /discussion. Required Readings: 1. Salvatore, Dominick; “Introduction to International Economics”; 3rd Edition, Wiley, 2012. 2. Selected class handouts to be distributed as needed. Grading: Homework: 5% Research paper: 40% Presentation & class participation: 5% Exam #1: 15% Exam #2: 15% Final Cumulative Exam: 20% Grade = (Homework)*5% + (Research Paper)*40% + (Presentation)*5% + (Exam #1)*15% + (Exam #2)*15% + (Final Cumulative Exam)*20% Grading Scheme: A (90% and above), B (80% to 89.9%), C (70% to 79.9%), D (60% to 69.9%), F (below 60%)



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Recommended Readings and Internet Resources:         

The Economist : http://www.economist.com The Wall Street Journal: http://www.online.wsj.com/public/us The World Bank: http://www.worldbank.org The IMF: http://www.imf.org Organization for Economic Co-operation and Development (OECD) United States Bureau of Labor Statistics Board of Governors of the Federal Reserve System United States International Trade Commission World Trade Organization (WTO)

Activities/Assignments:  Homework: The main purpose of the homework is to give you an opportunity to practice answering exam-type questions, and to test your understanding of the material as the course progresses. You may work together on the homework, discuss and use all resources to complete them and submit them on time. Problem sets will usually be handed out one week before they are due. All homework must be submitted on time. Late submissions will not be accepted.  Research Paper: The first draft of the research paper will be due March 23, 2015 (Monday). I will go over this draft thoroughly, and will discuss it with you in detail. The final draft of the paper will be due April 27, 2015 (Monday). No late papers will be accepted. You will be asked to analyze the international trade and finance of a country of your choice. You have plenty of time to write this paper during the semester, so start early. Have a look at the Optional Readings for ideas on how to write your paper, and sources. The paper should be 4000 words, including references, size 12 script, double spaced. The quality of the paper matters, not the quantity. You should by no means copy somebody else’s paper – either your classmate’s paper, or the papers that you use as a source of information. Copying violates the university honor system, and will be punished accordingly.  Presentation and Class Participation: You will be required to present your paper in class at the end of the semester.



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Your attendance in class, and especially your active participation, will have a major influence upon your grade. We will be doing in-class exercises and going over examples and discussion materials - therefore you are strongly encouraged to take part. A student must attend at least 80% of all classes, arrive on time, and participate actively in the in-class work, in order to be successful in this class. If you cannot dedicate the necessary time for this class, please take it in another semester, when you will be able to.  Exams: You have 2 midterm exams and a final exam to show how much you know about International Economics. Exam work is strictly individual. Cheating on the exams will not be tolerated. The GSU policy applies to plagiarism and cheating. All exams are closed book and notes, you may use only a simple calculator (no cell phones, i-phones or any other electronic devices). Course information: 1. Add/Drop Policy: You should comply with the GSU policy for add-drop and withdrawals. 2. Students are responsible for everything said in class, including any material not covered in the book, exam dates and any changes in the reading assignments. If you miss all or part of a class, be sure to find out from another student all the relevant material. 5. Attendance at all exams is mandatory. The professor must be notified in advance of any unusual problem, which makes a student's taking of an exam at the scheduled time impossible. Only rarely are such excuses accepted, in which case a prompt make-up exam will be given. Excuses must be in writing on official letterhead stationery (that of a doctor, a funeral director, etc.) All excuses must have an official phone number, which will be called for routine verification of the excuse. 6. No exceptions are made to the Final Exam date. 7. “Incomplete” is virtually never given. 8. Any Academic Dishonesty by the students will be treated in accordance with the university policy. Anyone caught cheating under any circumstances will automatically receive an “F” grade.



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Academic Dishonesty Statement: Students are expected to fulfill academic requirements in an ethical and honest manner. This expectation pertains to the following: use and acknowledgement of the ideas and work of others, submission of work to fulfill course requirements, sharing of work with other students, and appropriate behavior during examinations. These ethical considerations are not intended to discourage people from studying together or from engaging in group projects. The university policy on academic honesty appears in the catalog appendix, which can be found on the website at http://www.govst.edu/catalog/appendix.htm Disability Statement: GSU is committed to providing all students equal access to university programs and facilities. Students needing an accommodation based on disability should contact the Director of Access Services for Students with Disabilities (ASSD). Students must register with ASSD before faculty is required to provide appropriate accommodations. For more information or to register, please contact the Director of ASSD (Room B1215 or [email protected] or 708-235-3968). To ensure that learning needs are met, contact ASSD the first week of classes. GSU Mission Statement: Governors State University is committed to offering an exceptional and accessible education that imbues students with the knowledge, skills, and confidence to succeed in a global society. GSU is dedicated to creating an intellectually stimulating public square, serving as an economic catalyst for the region, and being a model of diversity and responsible citizenship. CBPA Mission Statement: We offer an accessible, high quality education to a diverse student body primarily from the Chicago area, actively engage in research, and provide service to the community. We empower our students with the knowledge, skills and ethical perspectives needed to succeed in a technologically sophisticated global society. Course Outline: Week:

Topic:

Chapter:

1.

Introduction to the Global Economy

Salvatore: Chapter 1.

2.

Comparative Advantage

Salvatore: Chapter 2.



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3.

The Standard Trade Model

Salvatore: Chapter 3.

4.

The Heckscher-Ohlin & Other Trade Theories

Salvatore: Chapter 4.

5.

EXAM #1

Chapters 1, 2, 3, 4

6.

Trade Restrictions: Tariffs

Salvatore: Chapter 5.

7. 8.

Nontariff Trade Barriers and the Political Economy of Salvatore: Chapter 6. Protectionism Economic Integration Salvatore: Chapter 7.

9.

Growth and Development with International Trade

Salvatore: Chapter 8.

10.

EXAM #2

Chapters 5, 6, 7, 8

11.

Salvatore: Chapter 9.

12.

International Resource Movements and Multinational Corporations Balance of Payments

Salvatore: Chapter 10.

13.

The Foreign Exchange Market and Exchange Rates

Salvatore: Chapter 11.

14.

Paper Presentations & Review

15.

FINAL CUMULATIVE EXAM



All chapters covered.

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