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International Trade - Theory and Policy
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Traditionally, intermediate-level international economics texts seem to fall into one of two categories.
Some are written for students who may one day continue on in an economics PhD program. These texts
develop advanced general equilibrium models and use sophisticated mathematics. However, these texts
are also very difficult for the average, non-PhD-bound student to understand. Other intermediate texts
are written for noneconomics majors who may take only a few economics courses in their program. These
texts present descriptive information about the world and only the bare basics about how economic
models are used to describe that world.
This text strives to reach a median between these two approaches. First, I believe that students need to
learn the theory and models to understand how economists understand the world. I also think these ideas
are accessible to most students if they are explained thoroughly. This text presents numerous models in
some detail, not by employing advanced mathematics, but rather by walking students through a detailed
description of how a model’s assumptions influence its conclusions. Second, and perhaps more important,
students must learn how the models connect with the real world. I believe that theory is done primarily to
guide policy. We do positive economics to help answer the normative questions; for example, what should
a country do about its trade policy or its exchange rate policy? The results from models give us insights
that help us answer these questions.