ATENEO DE MANILA UNIVERSITY

LOYOLA SCHOOLS

COURSE SYLLABUS
Course Number: EC 122 A & B
Course Title: International Economics
Department: Economics
School: School of Social Sciences
Semester: 1st School Year: 2014-2015
Number of Units: 3
Faculty: Dr. Marissa Maricosa A. Paderon
Schedule & Venue: T-TH 12:00-1:30 pm, C-144 (EC 122 A)
T-TH 1:30-3:00 pm, C-144 (EC 122 B)
A. Course Description:
International Economics is an introduction to international trade theory/policy and open
economy macroeconomics. The trade theory portion provides a systematic treatment of traditional
comparative advantage theory and new trade theory based on economies of scale. The open economy
macroeconomics portion emphasizes the importance of foreign exchange market using the asset
approach to exchange rate determination as the basic framework.
Pre-requisites: EC 111 and EC 102
B. Learning Outcomes:
Upon completing the course, the student will be able to:
Content Outcomes 1) Compare and contrast the different international trade theories.
2) Explain the various instruments of trade policy and effects on various sectors in the economy.
3) Differentiate the various forms of economic integration; its trade creating- and trade-diverting
effects.
4) Identify the operations of foreign exchange market.
5) Compare and contrast price, income and capital adjustment policy measures and their implications
on the balance of payments.
6) Assess external sector issues and policy implications in the light of developing country
experiences.
7) Evaluate the Philippine tariff and trade policy.
Skills Outcomes 8) Extrapolate trade data from available websites and explain the case of Philippine patterns of trade;
9) Explain the impact of instruments of trade policy on the different sectors of the economy through
graphical analysis;
10) Construct a trade portfolio by integrating trade data and trade indicators gathered, processed and
interpreted from available websites on country members of a trading bloc.
Attitudes Outcomes11) Internalize the effects of trade policy instruments; and influence policy makers on how to maximize
gains and minimize costs for any trading arrangement through research.
C. Course Outline:
Week 1: June 17-19
I. INTRODUCTION
1.1. Definition
1.2. Scope and Relevance of International Economics
P. Krugman and M. Obstfeld, Ch. 1
Weeks 2- 3: June 24- July 3
II. INTERNATIONAL TRADE THEORY
2.1. Mercantilism

2.2. The Classical Trade Theory

2.2.1. David Humes Price Specie Flow Analysis
2.2.2. Adam Smiths Theory of Absolute Advantage
2.2.3. David Ricardos Theory of Comparative Advantage
AFC, Chs. 2-4
KO, Ch. 2-3
Deardorff, A. (1998). Benefits and Costs of Following Comparative Advantage. Research
Seminar in International Economics Discussion Paper No. 423, School of Public Policy, the
University of Michigan.
Week 4: July 8-10
July 8 Case Study RP Patterns of Trade
2.3. The Neo-Classical Trade Theory
2.3.1. The HO Trade Model
AFC, Ch. 6 & 7
KO, Ch. 5-6
Week 5: July 15-17
2.3.2. The Theoretical Qualifications to the HO model
(Demand Reversal, Factor Intensity Reversal & Specific Factors Model)
AFC, Ch. 8
KO, Ch. 4
2.3.3. Empirical Tests of the Factor Endowments Approach
(Leontief Paradox & Recent Tests of HO Model)
AFC, Ch. 9
KO, Ch. 4, 7-9
Week 6: July 22-24
III. ALTERNATIVE THEORIES AND EXTENSIONS
3.1. Post-H-O Theories of Trade
(The Imitation Lag Hypothesis, The Product Cycle Theory, Linder Theory,
Kemp and Krugman Models, Intra-Industry Trade)
AFC, Ch. 10
KO, Ch. 10
Week 7: July 29-31
3.2. New Trade Theory
(Strategic Trade Model, Endogenous Growth Trade Model, and Gravity Trade Model)
Deraniyagala,S. and Fine, B. (2001). New Trade Theory versus Old Trade Policy: A
Continuing Enigma. Critical Survey, Cambridge Journal of Economics 2001, 25, 809-825.
AFC, Ch. 10
KO, Ch. 7-8
Week 8: August 5-7
3.3. Economic Growth and International Trade
( Rybczynski Theorem, Immiserizing Growth)
AFC, Ch. 11
3.4. International Factor Movements
AFC, Ch. 12
KO, Ch. 7
Week 9: August 12-14
1ST EXAM AUGUST 12
GROUP Report AUGUST 14
Weeks 10-11: August 19-21; 26-28
IV. TRADE POLICY
4.1. Tariff
AFC, Chs. 13-14
KO, Ch.9
Tecson, G. (1996). Philippine Manufacturing Industries and the Effects of Trade Policy
Reforms on Structure and Efficiency. In Medalla, et.al. Catching Up with Asias Tigers.
Philippine Trade and Industrial Policies, Vol. II. PIDS: Makati.
Week 12: September 2-4

4.2. Effective and nominal protection, DRC/SER and RCA

4.3. Non-tariff barriers
AFC, Chs. 13-14
KO, Ch. 8
Week 13: September 9-11
4.4. Arguments for protectionism and liberalization
AFC, Ch. 15
KO, Ch. 10-12
Bruton, H. J. 1998. A Reconsideration of Import Substitution. Journal of Economic
Literature 36 June pp. 903-936.
4.5. Economic Integration
AFC, Ch. 17
Krueger, A. (1997). Free trade agreements versus customs unions. Journal of Development
Economics 54: pp. 169-187.
UNCTAD Trade and Development Report (1996). Integration and Industrialization in East
Asia.
Week 14: September 16-18
4.6. Philippine Tariff and Trade Policy
M.M.A. Paderon Lecture Notes
Paderon, Marissa Maricosa (2013). Trade Liberalization and Trade Performance in Asia: 1974-2008.
PIDS Development Research News Vol. XXXI No.2, April-June, pp.1-6.
Paderon, Marissa Maricosa A. (2008). Did trade liberalization improve Philippine economic
growth: 1974-2003? in Lim, Joseph (ed.), Loyola School Review School of Social Sciences,
Vol.VII: 193-219, Ateneo de Manila University. Quezon City.
Leland dela Cruz, and Marissa M. A. Paderon (2005). Agricultural Trade Liberalization in the
Philippines: Policy History and Competing Perspectives. Institute of Philippine Culture,
Ateneo de Manila University.
Bautista, G., Leland dela Cruz, and Marissa M. A. Paderon (2004). Trade Liberalization and
Agricultural Policy in the Philippines in Trade Liberalization, Agriculture and Small Farm
Households in the Philippines: Proactive Responses to the Threats and Opportunities of
Globalization, LWR, HPI, CRS, PhilGerFund, PhilDHRRA, IIRR, ANGOC and AFRIM. pp.
6-13.
Bautista, G., Leland dela Cruz, and Marissa M. A. Paderon (2004). Effects of Trade Liberalization
on Philippine Agriculture: A Literature Review in Trade Liberalization, Agriculture and Small
Farm Households in the Philippines: Proactive Responses to the Threats and Opportunities
of Globalization, LWR, HPI, CRS, PhilGerFund, PhilDHRRA, IIRR, ANGOC and AFRIM.
pp.14-23.
Macam, M.M.P. (2000). Open Regionalism: The Philippines in APEC,in Readings in
Economics, Vol. I (revised edition), Ateneo de Manila University: Quezon City.
Villoria, A. and Macam, M.M.P. (2000). AFTA and the Philippines, in Readings in Economics,
Vol. I (revised edition), Ateneo de Manila University: Quezon City.
Macam, M.M.P.(1999). Philippine Tariff Reform Programs: Process and Prospects, in
Readings in Economics, Vol. II. Ateneo de Manila University: Quezon City.
Week 15: September 23-25
Film Showing The Commanding Heights SEPTEMBER 23
2nd EXAM SEPTEMBER 25
Week 16: September 30-Oct. 2
GROUP Report October 2
V. BALANCE OF PAYMENTS AND THE FOREIGN EXCHANGE MARKET
National Income and the Current Account
Balance of Payments
AFC, Ch. 24
KO, Ch. 13
Week 17: October 7-9
5.3. The Foreign Exchange Market
AFC, Ch. 20

KO, Ch. 14-15

5.4. Economic Policy in an Open Economy: Fixed vs Flexible Exchange Rates
AFC, Ch. 25-26
KO, Ch. 16-17, 19-22
FINAL EXAM: OCTOBER 14 or 16
D. Required Readings:
Appleyard, D., Field, A. and Cobb, S. (2010). International Economics. 5th ed. McGraw-Hill
Companies, Inc. New York.
Krugman, P., Obstfeld, M. and Melitz, M.(2012). International Economics: Theory and Policy. 9th
ed., Pearson Education South Asia Pte. Ltd.
**Lecture Notes of Dr. Paderon, Vol.I-II
E. Suggested Readings:
Paderon, Marissa Maricosa (2013). Trade Liberalization and Trade Performance in Asia: 1974-2008.
PIDS Development Research News Vol. XXXI No.2, April-June, pp.1-6.
Paderon, Marissa Maricosa A. (2008). Did trade liberalization improve Philippine economic growth:
1974-2003? in Lim, Joseph (ed.), Loyola School Review School of Social Sciences, Vol.VII:
193-219, Ateneo de Manila University. Quezon City.
Leland dela Cruz, and Marissa M. A. Paderon (2005). Agricultural Trade Liberalization in the
Philippines: Policy History and Competing Perspectives. Institute of Philippine Culture,
Ateneo de Manila University.
Bautista, G., Leland dela Cruz, and Marissa M. A. Paderon (2004). Trade Liberalization and
Agricultural Policy in the Philippines in Trade Liberalization, Agriculture and Small Farm
Households in the Philippines: Proactive Responses to the Threats and Opportunities of
Globalization, LWR, HPI, CRS, PhilGerFund, PhilDHRRA, IIRR, ANGOC and AFRIM. pp.
6-13.
Bautista, G., Leland dela Cruz, and Marissa M. A. Paderon (2004). Effects of Trade Liberalization on
Philippine Agriculture: A Literature Review in Trade Liberalization, Agriculture and Small
Farm Households in the Philippines: Proactive Responses to the Threats and Opportunities
of Globalization, LWR, HPI, CRS, PhilGerFund, PhilDHRRA, IIRR, ANGOC and AFRIM.
pp.14-23.
Bruton, H. J. (1998). A Reconsideration of Import Substitution. Journal of Economic Literature 36
June pp. 903-936.
Deardorff, A. (1998). Benefits and Costs of Following Comparative Advantage. Research Seminar in
International Economics Discussion Paper No. 423, School of Public Policy, The University of
Michigan.
Deraniyagala, S. and Fine, B. (2001). New Trade Theory versus Old Trade Policy: A Continuing
Enigma. Critical Survey, Cambridge Journal of Economics 2001, 25, 809-825.
Krueger, A. (1997). Free trade agreements versus customs unions. Journal of Development
Economics 54: pp. 169-187.
Lanzona, L. (2000). An Analysis of Globalization and Wage Inequality in the Philippines: An
Application of the Stolpher-Samuelson Theory. PASCN Discussion Paper No. 2000-03.
Macam, M.M.P.(1999). Philippine Tariff Reform Programs: Process and Prospects, in Readings in
Economics, Vol. II. Ateneo de Manila University: Quezon City.
Macam, M.M.P. (2000). Open Regionalism: The Philippines in APEC,in Readings in Economics,
Vol. I (revised edition), Ateneo de Manila University: Quezon City.
Salvatore, Dominick (2004). International Economics. 8th ed. Prentice Hall International, Inc.
Salvatore, Dominick (2004). Introduction to International Economics. John Wiley & Sons, Inc.
Villoria, A. and Macam, M.M.P. (2000). AFTA and the Philippines, in Readings in Economics, Vol.
I (revised edition), Ateneo de Manila University: Quezon City.
F. Course Requirements:
1st exam
2nd exam
Case Study
Group Report
Final exam

20%
20%
20%
20%
20%

**Group Report/Paper- The paper will account for 20% of the final grade.
The class will be divided into groups with 4 members each who will render an oral report on
certain topics on international economics that are of special significance. The reports will be
supplemented by formal lectures by the professor when necessary. The group will submit a written
report with a maximum length of 10 pages, single-spaced including all the acetates used in the
presentation and softcopy of report. The report should be submitted on the day of actual
presentation. Each group must give a one-page summary/outline of the report to the class on the day
of presentation.

Economic Geographies and Trade:

1) ASEAN Economic Community (ASEAN 10)
2) Regional Comprehensive Economic Partnership (RCEP) ASEAN, Australia, China, India Japan,
Korea New Zealand
3) Trans-Pacific Partnerships (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New
Zealand, Peru, Singapore, US, and Viet Nam)
**Case Study-- At least one case study will be given by the lecturer on relevant topics relating to
application of trade theory and policy. The average grade of the three cases will be worth 20 percent
of the final grade. The class will render a short presentation of the case and must submit a three-page
written analysis, single-spaced. The written report shall be submitted on the day of presentation/class
hours.
G. Grading System--A
: 92 100
B+
: 87 - 91
B
: 80 - 86
C+
: 74 79
C
: 68 - 73
D
: 60 - 67
F
: <60
H. Classroom Policies:
1. No make-up exam, case or quiz will be given in case of absences. Absence during an examination
day will mean a zero grade. In case of sickness, the student must submit a medical certificate to be
able to take the make-up exam.
2. Eating and drinking are not allowed during class hours.
3. Late case study and group projects will not be accepted.
4. Turn off cell phone or put in a silent mode during class hours.
5. Using the laptop unrelated to the lesson or activity is not allowed during class hours.
6. Using of all electronic gadgets (cellphones, ipod, etc.) is not allowed during class hours. Anyone
caught using any of those items will be confiscated.
I. Consultation hours: Thursday: 4:00-6:00 p.m.
/EC 122 Course Syllabus_Paderon /
29 May 2014