International Economics

Paper Code: 
CECO 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
 Outcome (at course level)
Learning and teaching strategies
Assessment Strategies 
Paper Title

 
International Economics
Students will:
CO 36: examine the various theories of international trade
CO 37: understand the  international trade policy

CO 38: comprehend the significance of economic integration and  about different forms of economic integration

CO 39: differentiate between different foreign exchange rate regimes.

CO 40: comprehend the significance of balance of payments and devaluation
Approach in teaching: Interactive Lectures and Discussions.
 
Learning activities for the students:
Practice Modules and
Assignments.
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: 

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: 
2023-24
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