WORKING PAPERS

Henry Thompson

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Multilateral Comparative Advantage and Trade

Efficient production ensures every country has the comparative advantage in its efficient good relative to every other country in their good. Multilateral comparative advantage rules out arbitrage that can undercut comparative advantage, explaining the multilateral trade pattern.

 

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 when energy is excluded. Energy has a larger effect than labor on output and marginal cost and is underpaid while 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 while capital grows 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. The paper also considers a constant depletion rate, a tragedy of the commons, and a myopic resource owner.

 

 

Business Services Specialization and Income Redistribution in TPP Countries

A series of specific factors models for countries entering the Trans-Pacific Partnership estimate the income redistribution and output adjustments to regional free trade. Labor is split into three skill groups. The focus is on changing prices of business services.