INTERNATIONAL ECONOMICS - II

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

To develop an understanding of various issues related to international economics  

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. Cherunilam, Francis (2001), International Economics, Tata McGraw-Hill Publishing Company Limited, New Delhi.
  1. Rana K.C and Verma K.N., International Economics (latest edition), Vishal Publishing Company.
  1. Soderston, Bo (1991), International Economics, The Macmillan Press Ltd., London.
  1. Aggarwal, M.R. (1979), Regional Economic Cooperation in South Asia, S. Chand and Co., New Delhi.
  1.  Bhagwati, J. (Ed.) (1981), International Trade, Selected Readings, Cambridge, University Press, Massachusetts.
  1. Chacholiades, M. (1990), International Trade: Theory and Policy, McGraw Hill, Kogakusha, Japan.
  1. Krugman, P.R. and M. Obstfeld (1994), International Economics: Theory and Policy, Glenview, Foresman.
  1. Lakshmana Rao, V. (1992), Essays on Indian Monetary and BOP Experience, Mittal Publications, New Delhi.
  1. Manmohan Singh (1964), India’s Export Trends and the Prospects for Self-sustained Growth, Oxford University Press, New Delhi.
Academic Session: