14.54 | Fall 2016 | Undergraduate

International Trade


Course Meeting times

Lectures: 2 sessions / week, 1.5 hours / session

Recitations: 1 session / week, 1 hour / session


14.01SC Principles of Microeconomics and 14.02 Principles of Macroeconomics are prerequisites for this course.

Course Overview

This course will analyze the causes and consequences of international trade and investment. We will investigate why nations trade, what they trade, and who gains (or not) from this trade. We will then analyze the motives for countries or organizations to restrict or regulate international trade and study the effects of such policies on economic welfare. Topics covered will include the effects of trade on economic growth and wage inequality, multinationals and foreign direct investment, international trade agreements and current trade policy disputes. We will also spend some time discussing aspects of the current debate on “globalization” such as the use of international labor standards, interactions between trade and environmental concerns, and the role of non-government organizations (NGOs). Although the course will emphasize the understanding of past and current events in the world economy, we will heavily rely on formal economic modeling to help us understand these events.

Required Text

Krugman, Paul, Maurice Obstfeld, and Marc Melitz. International Economics: Theory and Policy. 9th ed. Addison-Wesley, 2011. ISBN: 9780132146654.


In-class mid-term exam 35%
Final exam 50%
Problem sets 15%

There will be one in-class midterm exam (35% of the course grade), and one final exam (50% of the course grade). The exams will cover all the lecture material, all of the assigned textbook reading, and some of the additional readings. The specific readings that will be required for each exam will be announced well ahead of each exam date. There will be no make-up exams. All exams will be closed-book: You may not use notes, electronic devices, books, or communicate to other classmates. Six problem sets will be distributed during the semester. The problem sets will be collected and evaluated, and answers will be subsequently posted on the class website. You are encouraged to discuss these problems with your classmates; however, you must write up your own answers. Problem set evaluation will account for the remaining 15% of your course grade.

Grading Policy

  • Write clearly and legibly; if we can’t read it, we can’t grade it. Show the steps of your mathematical reasoning, and draw and label the figures clearly.
  • The grading for exams will be on the full 0–100 scale, not a truncated 60–100 or some such scale. So do not panic if your numerical score is low.
  • Check your answers against the answer key; this should resolve most of your questions. If any remain, ask the TA. Any regrading requests for exams must be made within two weeks from the date the graded answers are made available. If you ask for a regrading, your whole problem set or exam will be regraded. This may bring to light some previously unnoticed errors, and you may end up with a lower score, not higher.
  • On math questions, unless your answer is fully correct, the assignment of partial credit must be a matter for judgment. If you make a mistake on an early part of a question, everything thereafter will probably go wrong; we do not have the time to figure out if your subsequent answer is a “correct” follow-up given your earlier mistake.
  • Grading of any essay questions involves not only checking the logical correctness of your reasoning, but also an evaluation of the coverage, order of presentation, and overall quality of the writing. This entails some unavoidable subjective judgment, and, like balls and strikes in baseball, it is not open to question.

Course Info

As Taught In
Fall 2016
Learning Resource Types
Problem Sets
Lecture Notes