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LEARNING OBJECTIVES:
The objectives are that the students after having participated in the course should be able to:
• describe the basic stylized facts on world development at the level of the main national accounts aggregate, for the 19th and 20th century.
• apply the concepts of the steady state, growth stability, technical progress, imper¬fect competition and convergence on these facts.
• relate the stylized facts to the models.
• analyse the central neoclassical model as well as the selected endogenous models presented, so that the economic and formal logic of the models and their relations to the data can be presented in written form in clear language.
• describe the main pattern of international trade in the 20th century.
• apply the concepts of general equilibrium and arbitrage to trade theory.
• relate the stylized facts to trade theory.
• analyse the family of (2 x 2 x 2) models presented, so that the economic and formal logic of the models and their relations to the data can be presented in written form in clear language.
• describe the main limitations of the model in the light of higher order models.
• explain the relation between the steady state equilibrium in growth theory and the general equilibrium in trade theory.
• explain the role of imperfect competition in endogenous growth theory and its implications for trade theory.
• apply the models seen in the course to known and unknown cases.
COURSE DESCRIPTION:
The theory of growth deals with the long lines in the development. It appears to be approximately log-linear. This is explained by the Solow Model. The role of
technical progress and institutions are discussed.
Trade plays a decisive role in development, especially for small countries
The trade part concentrates on the 2 x 2 x 2 model (for two countries, two sectors and two factors of production): It looks at classical trade theory, and the distribution of the gains from trade between the factors.
The Heckscher-Ohlin model for trade between poor and rich countries is discussed. Higher order models are introduced.
COURSE SUBJECT AREAS:
1. Growth patterns: Long run and cross country
2. Solow model and the key endogenous growth models
3. Technological growth
5. Patterns of world trade
4. Classical trade theory: Gains from trade
5. Stolper-Samuelson and Rybczynski theorems
6. Heckscher-Ohlin model.
REQUIRED COURSES:
The compulsory courses in the first three semesters of the BSc Economics and Management program
LECTURER:
Martin Paldam.
TEACHING METHOD:
Lectures and exercises.
LITERATURE:
Charles I. Jones. An introduction to Economic Growth (2nd ed)
Norton 2002. It is 200 pp, app 150 pages will be chosen.
Charles van Marrewijk. International Trade and the World Economy
Oxford 2002, or later reprints. It is 380 p, app 150 pages will be chosen.
Lecture notes and exercises are parts of curriculum.
Total number of pages: Approx. 300 pages.
FORM OF ASSESSMENT:
A 4-hour written test jointly with the course Microeconomic Theory, giving a joint mark. Students who do not take Microeconomic Theory will have only a 2-hour written test in Growth and International Trade.
EXAMINATION AIDS ALLOWED: None.
