International Economics - II

Paper Code: 
25ECO 421
Credits: 
4
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 
  1. To make the students understand the concept of tariffs and other non-tariff barriers and to acquaint them with the theory of Economic Integration, particularly Customs Union.
  2. To acquaint the students with the meaning and components of balance of payments and devaluation.
  3. To introduce the students to the role of foreign exchange market, transactions involving foreign exchange and theories of exchange rate determination.

 

Course Outcomes: 

Course Outcomes (COs):

Course

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Course Code

Course Title

25ECO 421

International Economics-II

(Theory)

Students will-

CO121: evaluate theinternational trade policy and the partial and general equilibrium impact of various trade barriers.

CO122: evaluatetheinternational trade policy with respect to barriers and problems in international trade

CO123: analyzethe significance of economic integration.

CO124: analyse the components of balance of payments and causes of and measures to remove balance of payments disequilibrium.

CO125: examine the various aspects of foreign exchange marketsand various exchange rate systems.

CO126: 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, Quiz and Semester end examinations.

 

12.00
Unit I: 
International Trade Policy – I
  • Free Trade vsProtectionism
  • Tariffs – meaning and types;Partial Equilibrium Analysis of a Tariff
  • Rate of Effective Protection
  • General Equilibrium effects of tariffs in a small nation – The Stolper Samuelson Theorem
  • General Equilibrium effects of tariffs in a large nation – The Optimum Tariff.

 

12.00
Unit II: 
International Trade Policy – II
  • Import Quotas – Meaning, types and effects; Import Tariff vs Import Quota
  • Othernon-tariff barriers – Voluntary Export Restraints
  •  Technical, Administrative and Other Regulations
  •  International Cartels; Dumping; Export Subsidies;Strategic Trade and Industrial Policies.

 

12.00
Unit III: 
Economic Integration
  • Forms of economic integration;Trade creating customs union;Trade diverting customs union
  • Static and Dynamic effects of customs union
  • European Union, NAFTA, EFTA.

 

12.00
Unit IV: 
Balance of Payments & Devaluation
  • Components of balance of payments
  • Balance of payments disequilibrium – meaning and causes
  • Measures to correct disequilibrium in the balance of payments
  • Foreign Trade Multiplier
  • 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 risks, hedging and speculation
  • Determination of exchange rates – PPP theory & BOP theory
  • Exchange rate system – fixed exchange rates, flexible exchange rates.

 

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 Resource:

  • Balance of Payments Manual for India, Reserve Bank of India, Mumbai, Sept 2010.

 

Journal:

  • Foreign Trade Review, Sage Journals.

 

Academic Session: 
2025-26
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