Course goals

Master frontier models. Like other fields, international economics uses heterogeneous agent (firms, typically) models. Let's learn how to build, solve, and parameterize the types of models used in research.

Learn about the data. We will use both firm-level data and aggregate data that relates to international topics. We will pick up the jargon (e.g., terms of trade, free on board, real exchange rate) as we go.

Get a start on research. Our most important goal. The exposure to questions, models, and data is meant to get you thinking about what interests you and where you can make an contribution.

Course content

Reading: The papers listed below are "required" reading. You should give them a look before class. Many topics also have notes from me. There is an extended Reading list that provides more papers related to the topics we will cover in class and papers related to topics that we will not cover in class.

Seminars: You are expected to attend the UW international workshop. I strongly encourage you to attend the Virtual International Trade and Macro seminar, too. You can view the videos on YouTube if you cannot make the seminar.

Deliverables

Problem sets: There are approximately three problem sets. I encourage you to work on them with your classmates, but whatever you turn in should be your own work. The goal is to have a set of models and data that you are ready to work with in your own research.

Presentations: Presenting your work is an important skill to practice. The short presentations are of a paper from the literature. The goal is to practice distilling a paper down to its essentials. The long presentation can be either your own work or a critique of a paper from the literature.

Research writeups: Each week, you will write a short summary of a paper's main question and answer. You can typically do this by reading just the introduction and possibly skimming parts of the paper. The goal here is to get thinking about ideas—ideas that might lead to your own research.

Weekly schedule

This schedule is a work in progress. We will adjust dates (and topics) as needed.

Week 0: September 8
Introduction // Motivating questions
Introduction to trade data

Reading: Syllabus
Notes: Data and prices
Slides: Introduction // Census data
Code/Data: data_exploration.ipynb // 2013-2021-hs02.h5 // country.dta

Week 1: September 13 & 15
Firm-level facts
The CES-monopolistic competition model
Dynamic discrete-choice exporting models (the sunk cost model)

Reading:
Section 2 of Alessandria, Arkolakis, and Ruhl (2021)
Notes: CES
Slides: Firm level data facts // Sunk-cost model [updated 9/20]
Code/Data: firm-level-data.ipynb // EAM_1992_2017_FINAL.dta

Week 2: September 20 & 22
Dynamic discrete-choice exporting models (the sunk cost model)
Solving discrete-choice exporting models // Value/policy function iteration

Reading: Das, Roberts, and Tybout (2007) // Alessandria, Arkolakis, and Ruhl (2021)
Notes:
Slides: VFI // Das, Roberts, Tybout (2007)

Problem set #1: Data // Solving the sunk-cost model

Week 3: September 27 & 29
Solving discrete-choice exporting models, continued
Estimating discrete-choice exporting models

Reading: Skim: Ruhl and Willis (2017)
Notes:
Slides: Measuring trade costs (updated 9/29) // Ruhl and Willis (2007)

Week 4: October 4 & 6
Application: Policy uncertainty

Reading: Handley (2014), Alessandria, Khan, Khederlarian, Ruhl, and Steinberg (2021)
Notes:
Slides: Exporter life cycles // Uncertainty // AKKRS (2021)

Problem set #2: Estimating the sunk-cost model

Week 5: October 11 & 13
Application: Inventories and supply chains
Solving dynamic programming models with approximations

Reading: Alessandria, Kaboski, and Midrigan (2010)
Notes: Inventories
Code: eoq.ipynb

Week 6: October 18 & 20
General equilibrium // Welfare
Static models with heterogeneity
Dynamic models with heterogeneity

Reading:
Eaton and Kortum (2002) // Bernard, Eaton, Jensen and Kortum (2003)
Alessandria, Choi, and Ruhl (2021)
Notes: Ricardo

Week 7: Ocober 25 & 27
Short presentations
Short presentation details // Some ideas on the reading list
Ana :: Yasumasa :: Philip // Nurlan :: Manisha :: Julio

Reading: None
Notes: Short presentations

Week 8: November 1 & 3
Short presentation: Matt // Small open economy (SOE) business cycles
Endowment economies // Deterministic shocks // Stationary economies

Reading:
Notes: Small open economies // soe-deterministic.jl, soe-random-stationary.jl

Week 9: November 8 & 10
Small open economy (SOE) business cycles, continued
Nonstationary economies // Production economies

Reading: Aguiar and Gopinath (2007)
Notes:

Week 10: November 15 & 17
Two-country business cycle models // Risk sharing

Reading:
Notes: Two-country models // Slides

Problem set #3

Week 11: November 22 (no class 11/24)
Two-country business cycle models

Reading: Cole and Obstfeld (1991), Backus and Smith (1993)
Notes:

Week 12: November 29 & December 1
Sovereign debt

Reading: Arellano (2008)
Notes: Debt

Week 13: December 6 & 8
Sovereign debt, continued

Reading:
Notes:

Week 14: December 13 & 15
Long presentations
December 15: Phil//Julio

Reading: None
Notes: Long presentations

Week 14: December 17 (9:00-11:40, room 7142)
Long presentations
Matt//Manisha//Yasumasa//Nurlan//Anna