University Paris 1 Panthéon-Sorbonne
Paris School of Economics
Master 2 ETE, Empirical and Theoretical Economics
2015-2016 2nd semester, 18h
Instructor: Christophe Gouel (INRA and CEPII, , http://www.christophegouel.com)
This course covers the theory of trade policy and the assessment of their consequences using applied simulation models (partial and general equilibrium). Students will be introduced to simulation methods that can be used as companion to theory or to engage in the policy debate over trade policies.
The course grade will be determined by the participation to hands-on problems in class (1/4) and by home assignments based on a work to be done by group of 2 to 3 students (4/5). The work will consist in applying the tools learned during the course to answer simple questions of applied trade policy.
This course involves exercises of simulations using computers. Students have to bring their own laptop (one for two persons is enough) and have to install the software GAMS, which is free for models of small size such as the ones presented during the course.
You can download GAMS on the website http://www.gams.com/. You will also find on GAMS website the software documentation and many model examples.
The installation under Windows is standard and does not present any difficulty.
For the users of UNIX-based operating systems (Linux and Mac), GAMS works in these environments, but without user interface. One has to work in a terminal, with a text editor. For a better user experience, it is better to install a Windows emulator (Wine). For this approach, you will find the instructions on the following sites:
Since GAMSIDE under Wine is not very stable, you may also install Atom (https://atom.io/) to edit GAMS files. Within Atom, you should install the following packages:
language-gams to enable syntax highlighting of GAMS files and
terminal-plus to be able to launch a terminal and so GAMS inside Atom.
Taxing trade for tax revenue
- Baunsgaard, T. and Keen, M. (2010). Tax revenue and (or?) trade liberalization. Journal of Public Economics 94(9-10), 563-577.
- Gordon, R. and Li, W. (2009). Tax structures in developing countries: Many puzzles and a possible explanation. Journal of Public Economics 93(7-8), 855-866.
- Keen, M. and Ligthart, J. E. (2002). Coordinating tariff reduction and domestic tax reform. Journal of International Economics 56(2), 489-507.
Welfare maximizing trade policy
- Bagwell, K. and Staiger, R. W. (1999). An Economic Theory of GATT. The American Economic Review 89(1), 215-248.
- Broda, C., Limão, N. and Weinstein, D. E. (2008). Optimal Tariffs and Market Power: The Evidence. The American Economic Review 98(5), 2032-2065.
- Johnson, H. G. (1953). Optimum Tariffs and Retaliation. Review of Economic Studies 21(2), 142-153.
The political economy of trade protection
- Baldwin, R. and Robert-Nicoud, F. (2006). Protection for Sale Made Easy. CEPR, Discussion Paper (5452).
- Bernheim, B. D. and Whinston, M. D. (1986). Menu Auctions, Resource Allocation, and Economic Influence. The Quarterly Journal of Economics 101(1), 1-31.
- Conconi, P., Facchini, G. and Zanardi, M. (2014). Policymakers' horizon and trade reforms: The protectionist effect of elections. Journal of International Economics 94(1), 102-118.
- Freund, C. and Özden, C. (2008). Trade Policy and Loss Aversion. The American Economic Review 98(4), 1675-1691.
- Grossman, G. M. and Helpman, E. (1994). Protection for Sale. The American Economic Review 84(4), 833-850.
- Grossman, G. M. and Helpman, E. (1995). Trade Wars and Trade Talks. Journal of Political Economy 103(4), 675-708.
- Mayer, W. (1984). Endogenous Tariff Formation. The American Economic Review 74(5), 970-985.
- Rodrik, D. (1995). Political economy of trade policy. Handbook of International Economics, Volume 3, Part 1: International Trade Theory and Policy, Ch. 28, 1457-1494.
- Judd (1998), Numerical Methods in Economics, MIT Press.
- Miranda & Fackler (2002), Applied Computational Economics and Finance.
- Balistreri, E. J. and Hillberry, R. H. (2008). The Gravity Model: An Illustration Of Structural Estimation As Calibration. Economic Inquiry
- Dawkins, Srinivasan, & Whalley (2001), Calibration, in Heckman & Leamer, ed., Handbook of Econometrics, Elsevier pp. 3653-3703.
- Hansen & Heckman (1996), The Empirical Foundations of Calibration, The Journal of Economic Perspectives, 10(1) 87-104.
- Shoven & Whalley (1992), Applying General Equilibrium (Ch. 4-5).
Social Accounting matrices
- Francois & Reinert (1997), Applied Methods for Trade Policy Analysis (Ch. 4).
- Golan, A., Judge, G. and Robinson, S. (1994). Recovering Information from Incomplete or Partial Multisectoral Economic Data. Review of Economics and Statistics 76(3), 541-549.
- Sadoulet & de Janvry (1995), Quantitative Development Policy Analysis (Ch. 10).
- Annabi, Cockburn & Decaluwé (2006), Functional Forms and Parametrization of CGE Models, PEP, MPIA Working Paper 2006-04.
- Böhringer, Rutherford, & Wiegard (2003), Computable General Equilibrium Analysis: Opening a Black Box, Discussion Paper # 03-56, ZEW.
- Rutherford (2002), Lecture Notes on Constant Elasticity Functions.
- Shoven & Whalley (1992), Applying General Equilibrium (Ch. 4).
- Armington (1969), A Theory of Demand for Products Distinguished by Place of Production, Staff Papers - International Monetary Fund 16(1), 159-178.
- Arkolakis, C., Costinot, A. and Rodríguez-Clare, A. (2012). New Trade Models, Same Old Gains?. The American Economic Review 102(1), 94-130.
- Costinot, A. and Rodríguez-Clare, A. (2014). Trade Theory with Numbers: Quantifying the Consequences of Globalization. Handbook of International Economics Volume 4.
- Devarajan, S., Lewis, J. D. and Robinson, S. (1990). Policy lessons from trade-focused, two-sector models. Journal of Policy Modeling 12(4), 625-657.
- Kehoe, T., Polo, C. and Sancho, F. (1995). An evaluation of the performance of an applied general equilibrium model of the Spanish economy. Economic Theory 6(1), 115-141.
- Kehoe, T. J. (2005). An Evaluation of the Performance of Applied General Equilibrium Models on the Impact of NAFTA, in Kehoe, Srinivasan & Whalley, ed., Frontiers in Applied General Equilibrium Modeling: In Honor of Herbert Scarf, Chapter 13, 341-377.
- Balistreri, E. J., Hillberry, R. H. and Rutherford, T. F. (2010). Trade and welfare: Does industrial organization matter? . Economics Letters 109(2), 85-87.
- Balistreri, E. J., Hillberry, R. H. and Rutherford, T. F. (2011). Structural estimation and solution of international trade models with heterogeneous firms. Journal of International Economics 83(2), 95-108.
- Balistreri & Rutherford (2012), Computing general equilibrium theories of monopolistic competition and heterogeneous firms, in Dixon & Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, Elsevier, Ch. 23.
- Melitz, M. J. (2003). The Impact of Trade on Intra-industry Reallocations and Aggregate Industry Productivity. Econometrica 71(6), 1695-1725.
- Anderson, J. E. and Neary, J. P. (2005). Measuring the Restrictiveness of International Trade Policy. MIT Press
- UNCTAD and WTO (2012). A Practical Guide to Trade Policy Analysis, Chapter 2.