Monopolistic Competition and International Trade: Reconsidering the Evidence

D. Hummels, J. Levinsohn
1995 Quarterly Journal of Economics  
SYLLABUS Course Description: We economists traditionally divide the general field of International Economics into two subfields: International Finance and International Trade. In this course we will ignore this division. We will start by studying models from International Trade -the Ricardian model, the Heckscher-Ohlin model, and variants of the New Trade Theory model of increasing returns and monopolistic competition. By emphasizing dynamic general equilibrium versions of these models, we will
more » ... develop tools compatible with modern, general equilibrium macroeconomics. We will then use these sorts of models to address a number of topics, some of which are typically studied in International Finance courses. Specifically, we will try to answer the questions: (1) Why did static applied general equilibrium models of the North American Free Trade Agreement do such a poor job in predicting its impact on trade flows? (2) How can we best model real exchange rate fluctuations and the relationship of these fluctuations to international capital flows? (3) How can we use dynamic general equilibrium models to analyze the causes and consequences of international financial crises like those that afflicted Mexico in Assignments: There will be three problem sets, a group project, and a final exam. All assignments must be completed in order to receive a final grade for the course. Grading: The mark for each problem set will be counted once, and the mark for the group project and the mark for the exam will be counted twice, providing a total of eight marks. The Cooperation on Assignments: Students are permitted (and encouraged) to discuss the answers to problem sets together. Copying from another student's answers is not allowed.
doi:10.2307/2946700 fatcat:b63kz2tdzze35gae2check2wmm