International Trade Theory – Political Economy and European Integration

PEEI – Political Economy and European Integration
The course analyses European economic integration with the tools of economics. For each policy, students learn to answer six questions: what is the economic problem, what is the mechanism, why the EU level and under which competence, which instrument, what does the evidence say, and who gains, who loses and what is the trade-off. The framework closely mirrors the logic of the European Commission's Better Regulation framework, providing useful preparation for students interested in economic policy work or traineeships at the European Commission, the ECB and related institutions.

The first part (3 lectures) covers the history, institutions and competences of the Union. It opens with the European economy today. It then traces integration from its postwar origins to the polycrisis: the Treaty of Rome, the Single Market, Maastricht and Lisbon, enlargement, Brexit, and the responses to the various recent crises. Students learn the treaties as successive transfers of competence, subsidiarity and proportionality, the balance between supranational and intergovernmental governance, the institutions and their decision rules, the primacy of EU law, and the EU budget: the Multi-annual Financial Framework, own resources, NextGenerationEU and common borrowing.

The second part (5 lectures) analyses the EU's main economic policies as instruments of integration: trade policy and economic security, the Single Market, labour mobility and cohesion, competition and state aid policy, and industrial and climate policy. For each policy the course sets out the economic mechanism, the competence and Treaty base, the instrument, the evidence on its effects, and its distributional consequences. The part closes with an assessment of Europe's competitiveness and growth problem as diagnosed in the Draghi report: which problems each policy can address, which remain national, and what the trade-offs are.

The third part (4 lectures) examines the European Monetary Union and why monetary integration creates constraints of its own. Topics include the theory of optimum currency areas and its critics, the road to the euro, the ECB with its mandate,  fiscal policy in a monetary union,  and financial integration. The experience of the Eurozone in the financial, sovereign debt, Covid and energy crises serves as evidence throughout, showing how crises have reshaped monetary, fiscal and financial governance. 

ITT – International Trade Theory

This course-unit introduces students to the economic analysis of international trade, from the Ricardian model to recent theoretical contributions. It is structured in four blocks:
1. Ricardian models of trade (comparative advantage)
2. Winners and losers from trade (specific factors model)
3. Firms and trade (models with increasing returns to scale)
4. Topics in Trade
The course covers theories explaining the effects of trade, potential gains and their distribution, as well as empirical evidence in support of these theories.

This course is part of the Governance pathway of the Solvay Brussels School Sustainable Development Initiative (Bachelor in Economics). It contributes the economics of Political Economy and European Integration and International Trade Theory parts of the course.

By the end of this part of the course, students should be able to:
PEEI

• Explain the major stages of European economic integration and distinguish shallow from deep integration.
• Describe the EU's institutions, decision rules and budget, and how competences are divided between the EU and Member States.
• Apply basic micro- and macroeconomic reasoning to the EU's main economic policies as covered in this course: trade, the Single Market and cohesion, competition and state aid, industrial and climate policy, Economic and Monetary Union, and financial integration.
• Explain the economic rationale and architecture of the monetary union, and the roles of the ECB, EU fiscal governance and the banking union.
• For any EU policy, answer the six questions of the course: the problem, the mechanism, the EU level and competence, the instrument, the evidence, and who gains, who loses and the trade-off.
• Read and question economic data on the EU and its Member States, and draw clear conclusions from them.
• Analyse current debates on the European economy, such as those on growth, competitiveness and economic sovereignty, and evaluate proposals for reform with the tools of the course.

ITT

• Solve the workhorse trade models to determine the patterns of specialization, gains from trade, and who wins and loses.
• Explain how the effects of trade can be measured in the data, and interpret the key empirical findings.
• Apply the theoretical models and the empirical evidence to current policy debates.

This course contributes to the specific learning outcomes for 

• B-ECON: LO 1.1, 1.2, 2.2, 3.3.
• B-INGE: LO 1.1, 1.3, 2.1, 2.2.

Required and Corequired knowledge and skills

Basic concepts of micro- and macroeconomics.

• Ex-cathedra lectures with in-class interaction.
• Readings and optional data exercises.

References, bibliography, and recommended reading

Provided by the teacher on the UV.

Course notes

• Université virtuelle

Contacts

• glenn.magerman@ulb.be for the PEEI part
• lidia.smitkova@ulb.be for the ITT part

 

Campus

Solbosch

Method(s) of evaluation

• written examination

written examination

• Closed question with multiple choices (MCQ)
• Open question with fill-in the blanks text

One written exam for the whole course ECON-S3001 (ITT and PEEI together), one grade out of 20. The exam combines multiple-choice with multiple-response questions. Questions emphasise the application of economic reasoning to policy situations, including the reading of data, rather than the memorisation of institutional detail. No partial grades for PEEI or ITT are computed or carried over, between exam sessions or academic years. A student who obtains 10/20 or more for the unit in the January session keeps that mark and does not re-sit in August. A student who re-sits anyway gets the August mark, even if lower. Further practical modalities will be announced on UV.
The course instructors reserve the right to invite any student to an additional oral interview in order to verify their personal command of the content of the submitted examination, particularly where inconsistencies identified in the examination prevent the instructor from properly assessing the student’s level of mastery of the knowledge and skills targeted by the course.

Language(s) of evaluation

• english