WORKING PAPERS

Henry Thompson email

 

Multilateral Comparative Advantage

Efficient production ensures every country has the comparative advantage in its good relative to every other country in their good. Bilateral comparative advantage, however, fails to identify the trade pattern with many countries and goods. Multilateral comparative advantage MCA rules out trade with other countries that can undercut bilateral comparative advantage between two countries, identifying multilateral trade.

 

A Physical Production Function of the US Economy, 1951 2008

A production function motivated by the concept of work separates the interaction of energy and labor with capital. Estimates outperform log linear and translog for US data. Misspecification bias is apparent when energy is excluded. Energy has a larger effect than labor on output and marginal cost and is underpaid, but labor overpaid.

 

 

A Nonrenewable Resource in the Factor Proportions Model

Consider a small open economy producing a nonrenewable resource intensive export. Optimal depletion implies the resource price rises at the rate of the capital return. Labor grows at a steady rate while capital grows with investment out of income. Factor prices, depletion, and outputs continuously adjust. The effects of taxes are examined and illustrated with Cobb-Douglas simulations. The paper considers a constant depletion rate, tragedy of the commons, and myopic resource owner.

 

 

A Macroeconomic Model for Greece in its Crisis

The IS-LM macroeconomic model is modified for Greece in the Eurozone. Fiscal, monetary, and exchange rate policies are unavailable and would have perverse outcomes even if available. The only policy option is to increase investment optimism.

 

 

Energy in a Translog Production Function of the US Economy, 1973-2013

Energy is included with capital and labor in an error correction production function for quarterly data. Energy proves a critical factor. Estimates support constant returns with smooth technological progress, but not competitive factor markets. Energy exposes labor as overpaid.