WORKING PAPERS

Henry Thompson

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Multilateral Comparative Advantage

Every country has the comparative advantage in its efficient good relative to every other country in their good.  Multilateral comparative advantage adds relative price comparisons for all trading opportunities across other countries.  Multilateral comparative advantage predicts the multilateral trade pattern.   

   

Factor Tariffs, Import Competing Supply, and Income

A tariff in neoclassical economy with a domestic and an imported factor lowers import but may raise income due to increased quantity supplied of the import competing factor.  Substitution, factor shares, and the supply elasticity determine adjustments to a tariff.  The tariff can optimize income or tariff revenue.   

 

A Physical Production Function of the US Economy, 1951 – 2008

A production function motivated by the concept of work separates interaction of energy and labor with capital.  Estimates outperform log linear and translog production functions for US aggregate output with data from 1951 to 2008.  Misspecification bias is apparent excluding energy.  Energy has a larger effect than labor on output and marginal cost, and is underpaid with a shadow price at least three times its market price.  In stark contrast, labor is overpaid.

 

A Nonrenewable Resource in the Heckscher-Ohlin Model

A small open economy produces a nonrenewable resource intensive export.  Labor grows at a steady rate and capital with investment out of income.  Optimal depletion implies the resource price rises at the rate of the capital return.  Factor prices, depletion, outputs, and income adjust over time.  The effects of an import tariff, export subsidy, and depletion tax are examined.  Cobb-Douglas simulations illustrate endogenous variable paths.  A constant depletion rate, tragedy of the commons, and myopic resource owner are considered. 

 

Regional Trade in a Three Country Model

This three country model of constant cost production and trade with identical Cobb-Douglas utility has balanced trade.  Country sizes and productivities determine whether trade is global between all three countries or “regional” and limited to two countries.  The third country is isolated from trade if it is too small and unproductive, or too large and productive.  In the model with three goods, global trade occurs only if each country ranks highest in production potential for a separate good.  Regional trade depends on the geographical distribution of production potential, a testable hypothesis.