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THE GEORGE WASHINGTON UNIVERSITY

Department of Economics

Economics 281 Prof. Steve Suranovic

International Trade Theory Fall 2003

The purpose of the research paper is to explore the trade literature that we do not have time to cover in class and to investigate new areas of research in trade. It is also meant to stimulate potential research topics for dissertations. Below is a list of possible topics for research papers. This list is mainly suggestive. You are free to choose other topics not on this list. However, please do not suggest a topic that is not real-sector trade related. Ideally, I would like students to choose a diverse set of topics so that the presentations will allow us all to see a wide range of issues. In other words, I do not want too many students choosing the same topic, although by narrowing the focus it may be possible to identify several sub-topics that are sufficiently distinct from each other. This is why I want you to get approval of your topic before proceeding.

The research paper should consist of primarily a literature review on a particular topic/issue. You should read as many articles on the topic as you can, past and present. Then try to identify and discuss only those which address critical theoretical or practical issues. Sum up the paper with any unanswered questions that still remain or directions of future research in the area.

TOPICS

1) Dynamic Comparative Advantage - These models should address changes in technology over time. Perhaps using Ricardian models with endogenous unit labor requirements. They should relate to the infant industry argument for protection in some way. The Prebisch-Singer hypothesis from the 1950s should also be related.

2) External economies of scale. There is a large segment of the literature from the 70s and 80s which consider economies of scale that are external to the firm but internal to the industry. One practical advantage of these models is that it allows one to maintain perfectly competitive behavior on the part of firms. But, what exactly are the issues and conclusions of this literature? One main contributor to this literature was Arvind Panagariya.

3) The Compensation principle - Review the history of this principle, from Mill to Hicks and Kaldor, to Scitovsky’s (1941) critique, to whatever has been said recently. Discuss both theoretical and practical issues.

4) Multiple Distortions - Most trade policy analysis in the presence of distortions considers only one distortion at a time then considers potential policy responses. Investigate the literature for studies of of trade policy with multiple distortions present. Review the most prominent contributions. How do policy prescriptions compare with the single distortion cases?

5) Game Theoretic Applications in Trade: Early models including game theory include Johnson’s Retaliation paper. More recent applications may be found in discussions of free trade area formation. Investigate recent applications of game theory models in a trade context.

5) ADs and CVDs - Two prominent trade laws sanctioned by the WTO are Antidumping (AD) and countervailing duty (CVD) procedures. Investigate the economic rationale for these procedures and provide a review of the theoretical analysis of these actions and counteractions.

6) Leontief Paradox - Provide an account of the original empirical exercise that generated the paradox and the major recalculations that have been done since then. What is the current status of the paradox?

7) Economies of Scale or Increasing Returns in History - IRS and its potential impacts on trade had been known and discussed by Smith, Marshall, Graham etc. long before the new trade theory of the 1980s. Explain what types of conclusions were reached by these early theorists. Do their conclusions differ much from the new trade theory?

8) Second-Best Applications - Provide a literature review of the most important applications of the theory of the 2nd-Best to trade policy.

9) Welfare Effects of Trade Policies - Review the empirical trade literature that has investigated the welfare effects of trade policies. Explain the standard methods of analysis and report the estimated effects. Who wins, who loses, by how much?

10) Non-tradable Goods - Many trade models have been created incorporating non-tradable goods. How do standard trade results change in their presence?

11) Multinational Corporations and Trade - What are the major issues, what are the main papers in this literature.

12) Pick a recent trade-related paper in a prominent Journal, Journal of International Economics, Review of International Economics, AER, QJE, JPE, etc. Trace the heritage or pedigree of the ideas presented in that paper. In other words, review the paper and its most important predecessors.

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