International Economics

Paper Code: 
25CECO 412
Credits: 
6
Contact Hours: 
90.00
Max. Marks: 
100.00
Objective: 
  1. To examine the various theories related to international trade
  2. To analyze the concept of tariffs and non-tariff barriers
  3. To acquaint the students with the theory of Economic Integration, foreign exchange rate and balance of payments

 

Course Outcomes: 

Course Outcomes (COs):

Course

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Course Code

Course Title

25CECO 412

International Economics

(Theory)

Students will-

CO43: distinguish between inter-regional and international trade, examine the classical trade theories and related aspects

CO44:comprehendoffer curves and terms of trade andexamine the H-O model of trade and related aspects

CO45: differentiate between free trade and protectionism and examine tariffs and non-tariff barriers and various forms of economic integration

CO46: comprehendthe foreign exchange market, transactions involved and foreign exchange rate

CO47: comprehend the various aspects of balance of payments and devaluation

CO48:contribute effectively in course-specific interaction.

Approach in teaching: Interactive Lectures, Discussion, Case studies.

 

Learning activities for the students:

Presentations, Assignments and Group discussions

Class activity, Assignments and Semester end examinations.

 

18.00
Unit I: 
International Trade Theory -I
  • Inter-regional and international trade
  • Theories of international trade – Mercantilism, Theory of absolute advantage, Theory of comparative advantage and Opportunity cost theory (constant and increasing opportunity costs case)
  • Empirical tests of Ricardian Model

 

18.00
Unit II: 
: International Trade Theory -II
  • Offer Curves – Meaning; General Equilibrium Analysis- Equilibrium Relative Commodity Prices with trade
  • Terms of trade: Definition & various concepts
  • Heckscher - Ohlin Theory
  • Empirical tests of H-O model & Leontief Paradox

 

18.00
Unit III: 
International Trade Policy
  • Free Trade versus Protectionism
  • Tariff – Meaning, Classification, Partial & General Equilibrium analysis, Stolper Samuelson theorem, Rate of effective protection, Optimum tariff
  • Quotas – types and effects
  • Import Quota versus Import Tariff
  • Other non-tariff barriers; New Protectionism – Strategic Trade Policy; Economic Integration – Various forms; Trade Creating and Trade Diverting Customs Union; Static and Dynamic Effects of Customs Union

 

 

18.00
Unit IV: 
Foreign Exchange Market and Foreign Exchange Rate
  • Foreign Exchange Market – functions
  • Foreign Exchange Transactions - Concepts of Arbitrage, Spot and Forward Rates; Futures; Options; Foreign Exchange Risks; Hedging and Speculation
  • Foreign Exchange Rate – meaning
  • Exchange Rate Regimes – Fixed, Flexible, Managed Floating
  • Foreign Exchange Control – Meaning, Objectives and Methods

 

 

18.00
Unit V: 
Balance of Payments and Devaluation
  • Balance of Payments – Components
  • Disequilibrium in Balance of Payments – Causes
  • Measures to correct disequilibrium in the Balance of Payments
  • Devaluation- Meaning and limitations
  • Elasticities Approach and Income Absorption Approach to devaluation
  • The J curve effect
  • Foreign Trade Multiplier

 

Essential Readings: 
  1. Salvatore, D., International Economics: Trade and Finance, Wiley; Eleventh edition 2014.
  2. Cherunilam, Francis, International Economics, Tata McGraw-Hill Publishing Company Limited, New Delhi, 2001.

 

References: 

Suggested Readings:

  1. Appleyard, Dennis R., International Economics, McGraw Hill Education (India) , Chennai,  8th edition, 2016.
  2. Rana K.C and Verma K.N., International Economics, Vishal Publishing Company, latest edition.

. E Resources:

  • Balance of Payments Manual for India, Reserve Bank of India, Mumbai, Sept2010

Journal:

  • Foreign Trade Review, Sage Journals

 

Academic Session: 
2025-26
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