WORKING PAPERS

Henry Thompson

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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 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 Nonrenewable Resource in the Factor Proportions Model

Consider a small open economy with an export intensive in a nonrenewable resource.  Optimal depletion implies the resource price rises at the rate of the capital return.  Assume the labor force 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 also considers depletion and trade with a constant depletion rate, tragedy of the commons, and myopic resource owner.

 

A Macroeconomic Model for Greece in Crisis

The IS-LM macroeconomic model is modified for Greece in the Eurozone.  Fiscal, monetary, and exchange rate policies are unavailable and at any rate would have perverse outcomes.  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 of production.  Estimates support constant returns to scale with smooth technological progress.  The results do not support competitive factor markets.  Specifically labor is overpaid.