The videos below generally use tools of intermediate microeconomics. Separate videos on these subjects are availalable here.
These lectures introduce international trade with a general equilibrium model. The example is the Ricardian model. The Ricardian model focuses on differences in technology across countries (and the resulting differences in labor productivity) as a source of mutually beneficial trade across countries.
The Ricardian model assumes that there is only one factor of production: labor. This results in a constant opportunity costs (i.e. the PPF is linear).
Note that many of the concepts introduced here will be be used in the neoclassical model with multiple inputs.
Ricardian model assumptions (20:13) This video lays out the assumptions of the Ricardian model and how they can be used for some of the critical tools (e.g. full employment, labor as the only input, etc.)
Ricardian production possibilities frontier (6:02) This video lays out the basics of a PPF, which depicts the supply-side of the economy. The slope is the opportunity cost of production.
Ricardian consumption possibilities frontier (4:48) This video develops the consumption possibility frontier, which is a way to describe the demand-side of the economy. Consumption will be limited by the value of production (i.e. national income)
Ricardian model basics (16:51). This lecture lays out the basic results of the Ricardian model, using the topics above. The concept of comparative advantage is introduced. Mutually beneficial trade between two countries is analyzed.
Effects of trade on labor in a Ricardian model (10:24) The "Ricardian model basics" introduces the country-wide benefits of trade. This video looks at the effects of trade on wages, both when workers cannot move between industries and when they can move to the export sector.
C.2 Neoclassical models of trade (demand and endowment based)
Tastes as basis for trade (8:38) This version show how ifferences in consumer tastes can be a basis for trade. The two countries are assumed to be identical on the supply side: identical technologies and identical resources. This also introduces "factor price equalization"
Endowments as basis for trade (Heckscher-Ohlin). Assumes identical technologies and identical homothetic tastes.
HO video 1: Intuition about HO model (7:26) ; This provides an intuitive explanation of the HO model
HO video 2: HO using PPFs (9:43): This is a depiction of the impact of different factor endowments on autarky relative prices
HO video 3: HO using relative factor prices (7:09): This shows how factor endowments affect input and output prices (and results in factor price equalization across countries)
HO video 4: Homothetic tastes (5:50): The Heckscher-Ohlin model formally assumes homothetic tastes (i.e. with unchanging prices, consumers buy the same combination of goods even if in come rises.)
Dissecting the gains from trade
The trade equilibrium in the neoclassical framework is discussed in this video . Please note that I am using social indifference curves for this video.
The overall increase in GDP and consumption possibilities can be broken up in to two parts:
Gains from exchange (10:09) Countries can gain by simply trading on the world market without changing what they produce.
Gains from specialization (9:22) There are further gains possible from firms producing more of the good destined for the export market and less of the good competing with low priced imports)
Very short run (with immobile labor and capital between domestic industries)
Two different versions of this analysis (with the same final result):
Short run (specific factors model--with mobile labor between domestic industris and industry-specific capital)
Two different versions of this analysis (with the same final result):
The very short run and short run models use the following background material. Please review as needed:
Long run model--Stolper-Samuelson (with labor and capital mobile between industries)
Two different versions of this analysis (with the same final result). I would recommend that you take a look at both though they are essentially interchangeable:
Many modern trade models are based on differentiated produts and declining average costs.
Some older and less technical explanations