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Chapter 3: Interdependence and the Gains from Trade

Recent Posts
(Note: Page numbers referenced in posts prior to June 1, 2011 refer to 5th edition)

 

November 28

Dividing Household Chores

Emily Oster explains why the principle of comparative advantage also applies to the division of labor within a household.

Textbook References:

Pages 57-58 “Applications of Comparative Advantage”

September 13

The Trading Game

Mark Bellemare presents an in-class trading game that illustrates the gains from trade.

Textbook References:

Chapter 3 “Interdependence and the Gains from Trade”

November 23

Thanksgiving Shopping Advice

Steve Sexton argues that buying locally grown food is not better for the environment.

Textbook References:

Pages 10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”
Chapter 3 “Interdependence and the Gains from Trade”

March 30

Should the United States depend on foreign suppliers for vital resources?

Allen Sanderson provides a humorous view of protectionists.

Textbook References:

Pages 58-59 “Should the United States Trade with Other Countries?”
Pages 188-194 “The Arguments for Restricting Trade”

February 18

Reinhardt on Trade

Uwe Reinhardt discusses the value of free trade, and presents a concern about it from Alan Blinder.

Textbook References:

Chapter 3 “Interdependence and the Gains from Trade”
Pages 180-188 “The Winners and Losers from Trade”

February 12

The Case against "Winning the Future"

Trade is mutually beneficial and is not a competition to be "won."

Textbook References:

Chapter 3 “Interdependence and the Gains from Trade”

February 8

On Comparative Advantage, Imperfect Information, and Boston Weather

Why did Mankiw shovel snow off of his roof instead of hiring someone else to do it?

Textbook References:

Pages 58 “Should Tiger Woods Mow His Own Lawn?”
Page 84 “Price Increases After Natural Disasters”

February 6

The State of U.S. Manufacturing

Despite the decline in factory jobs, the U.S. still leads the world in manufacturing.

Textbook References:

Pages 58-59 “Should the United States Trade with Other Countries?”
Page 417 “The Loss of Manufacturing Jobs”

January 31

Would you call Gary Becker for marital advice?

Paula Szuchman argues that economics offers insights into successful marriages.

Textbook References:

Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 52-53 “Specialization and Trade”
Pages 54-57 “Comparative Advantage: The Driving Force of Specialization”

July 19

The Principle of Comparative Advantage Applies Even To Union Picketing

Non-union workers are earning minimum wage picketing for a union. The union is upset that its employer has hired non-union workers.

Textbook References:

Pages 54-57 “Comparative Advantage: The Driving Force of Specialization”
Pages 629-631 “Unions and Collective Bargaining”

February 4

Defending Jobs Abroad

Matthew Slaughter argues that taxing U.S. firms' foreign operations will destroy jobs in the U.S.

Textbook References:

Pages 7-8 “Principle 4: People Respond to Incentives”
Page 8 “Principle 5: Trade Can Make Everyone Better Off”
Pages 54-57 “Comparative Advantage: The Driving Force of Specialization”
Page 567 “Free Trade”

December 18

Reinhardt on Drug Reimportation

Uwe Reinhardt argues that American politicians are unwilling to fix prices for prescription drugs, so they want foreign governments to do it for them.

Textbook References:

Chapter 3 “Interdependence and the Gains from Trade”
Pages 208-209 “Technology Spillovers, Industrial Policy, and Patent Protection”
Pages 326-331 “Price Discrimination”


December 4

What Responsibilities Should the Fed Have?

Vincent Reinhart argues that the Fed may be asked to do too much.

Textbook References:

Pages Pages 54-57 “Comparative Advantage: The Driving Force of Specialization”
Pages 648-649 “Federal Reserve System”


October 20

More Shots in the Trade War

China imposes a new tariff on nylon in a tit for tat trade war with the U.S.

Textbook References:

Page 8 “Principal 5: Trade Can Make Everyone Better Off”
Chapter 3 “Interdependence and the Gains from Trade”
Pages 183-185 “The Effects of a Tariff”
Pages 728-730 “Trade Policy”


Apr. 6

The Four Pillars of Sound Policy

Edward Glaeser worries that the “Washington Consensus” (fiscal restraint, the rule of law, free trade and privitazation) may be coming to an end.

Textbook References:

Pages7-8 “Principle 4: People Respond to Incentives”
Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Chapter 3 “Interdependence and the Gains from Trade”
Pages 566-567 “Property Rights and Political Stability”
Pages 589-593 “Policy 3: Government Budget Deficits”

Chapter 3: Interdependence and the Gains from Trade
Archived Posts

 

Mar. 11

Turning Away the Best and the Brightest

The stimulus bill contains a clause making it harder for U.S. firms to hire skilled immigrants.

Textbook References:

Chapter 3 “Interdependence and the Gains from Trade”
Chapter 9 “Application: International Trade”


Mar. 4

Another Loss for Economic Freedom

The economic stimulus bill restricts the hiring of foreign workers.

Text References:

Page 8 “Principle 5: Trade Can Make Everyone Better Off”
Pages 8-10 “Principle 6: Markets Are Usually a Good Way to Organize Economic Activity”
Chapter 3 “Interdependence and the Gains from Trade”
Chapter 9 “Application: International Trade”


Feb. 16

China Favors Free Trade, Even if U.S. Doesn’t

China promises to avoid protectionism, even though the U.S. stimulus bill includes protectionist policies.

Textbook References:

Chapter 3 “Interdependence and the Gains from Trade”
Chapter 9 “Application: International Trade”
Pages 728-730 “Trade Policy”


Feb. 10

Tit for Tat

Canadian unions join the chorus for economic nationalism.

Textbook References:

Page 8 “Principle 5: Trade Can Make Everyone Better Off”
Chapter 3 “Interdependence and the Gains from Trade”
Chapter 9 “Application: International Trade”
Pages 728-730 “Trade Policy”


Feb. 5

4. Malkiel on “Buy American”

Burton Malkiel argues that the stimulus package should not include protectionist provisions.

Textbook References:

Page 8 “Principle 5: Trade Can Make Everyone Better Off”
Chapter 3 “Interdependence and the Gains from Trade”
Chapter 9 “Application: International Trade”
Pages 728-730 “Trade Policy”


Jan. 31

Smoot, Hawley and Pelosi

The proposed stimulus package contains a provision that would prevent infrastructure projects from using foreign steel.

Textbook References:

Chapter 3 “Interdependence and the Gains from Trade”
Chapter 9 “Application: International Trade”
Pages 728-730 “Trade Policy”


Jan. 4

The Protectionist Threat

Mankiw warns against the possibility of protectionism in the stimulus package.

Textbook References:

Chapter 3 “Interdependence and the Gains from Trade”
Chapter 9 “Application: International Trade”
Pages 728-730 “Trade Policy”


Feb. 2

Irwin on “Buy American”

Douglas Irwin advises against requiring infrastructure projects to use domestic steel and other inputs.

Textbook References:

Chapter 3 “Interdependence and the Gains from Trade”
Chapter 9 “Application: International Trade”
Pages 728-730 “Trade Policy”