INTERNATIONAL ECONOMICS -II

Paper Code: 
ECO 421
Credits: 
4
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 

Course Objectives:

The objectives of this course are-

  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 (COs):

Course

Outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Paper Code

Paper Title

ECO 421

International Economics-II

CO53: Acquire an understanding of international trade policy and the significance of economic integration.

CO54: Learn about the functions and transactions in foreign exchange markets.

CO55: Analyze the various exchange rate systems.

CO56: Comprehend the components of balance of payments and causes of and measures to remove balance of payments disequilibrium.

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 vs Protectionism;
  • 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;
  • Other non 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;
  • 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 risks, 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: 
2019-20
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