International Economics II

Paper Code: 
ECO 421
Credits: 
4
Contact Hours: 
60.00
Objective: 

To develop an understanding of various issues related to international economics  

12.00
Unit I: 
International Trade policy I

Free Trade V/s Protecxtionism

Tariffs- meaning and types

partial equilibrium analysis of a tariff

Rate of effective Protection

General Equilibrium effects of tariffs in a small nation - The Stopler Samuelson Theorem

General Equilibrium effects of tariff in a large nation - The optimum tariff

12.00
Unit II: 
International Trade policy II

Import Quotas - Meaning , Types and effects

Import tariff v/s Import Quota

other non tariff barriers - Voluntary Export Restraints; technical, administrative and other regulations; iinternational cartels; dumping; Export subsidies

Strategic trade and international policies

12.00
Unit III: 
Economic Integration

•    Forms of economic integration
•    Trade creating customs union
•     Trade diverting Custom Union
•    Static and Dynamic Effects of custom Union

European Union, NAFTA, EFTA

12.00
Unit IV: 
Balance of Payment and devaluation

Components of balance of payments
 Balance of payments disequilibrium - meaning and causes
Measures to correct disequilibrium in the balance of payment
Foreign trade multiplier

Effects of fiscal & monetary policies on external balance

 Devaluation – elasticities approach, Marshall-Lerner condition, income absorption approach

The J – curve effect

12.00
Unit V: 
Foreign Exchange Market and Exchange Rates

•    Functions of foreign exchange market
•    Transactions in foreign exchange market – spot & forward exchanges, futures, options, swap operation, arbitrage, foreign exchange risk, hedging and speculation.
•    Determination of exchange rates – PPP theory & BOP theory
•    Exchange rate system – fixed exchange rates, flexible exchange rates
 

Essential Readings: 
1. Appleyard, Dennis R., International Economics, McGraw Hill Education (India) ,                Chennai, 8th edition, 2016.
2. Salvatore, D., International Economics: Trade and Finance, Wiley; Eleventh edition          2014.
3. Cherunilam, Francis, International Economics, Tata McGraw-Hill Publishing Company      Limited, New Delhi, 2001.
4. Rana K.C and Verma K.N., International Economics, Vishal Publishing Company,            latest edition.
5. Soderston, Bo, International Economics, Macmillan Press Ltd., London, 1991.
6. Chacholiades, M., International Trade: Theory and Policy, McGraw Hill, Kogakusha,        Japan, 1990.
7. Krugman, Paul .R. and Obstfeld , Maurice, International Economics: Theory and              Policy, Pearson Education 6th edition, 2004.

 

Academic Session: 
2018-19
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