WORKING PAPERS

Henry Thompson

 

Factor Tariffs, Import Competing Supply, and Income

 A tariff in neoclassical economy with a domestic factor 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 change.  The tariff has the potential optimize income or tariff revenue.   

 

 

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

This paper introduces a production function motivated by the concept of work that 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 in estimates excluding energy.  Energy has a larger effect than labor on both output and marginal cost, and is underpaid with a shadow price at least three times its market price.  Labor is overpaid.

 

 

A Nonrenewable Resource in the Heckscher-Ohlin Model

This paper examines a small open economy producing a nonrenewable resource intensive export in a factor proportions model.  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.  The model solves for adjustments in factor prices, depletion, outputs, and income.  The effects of an import tariff, export subsidy, and depletion tax are examined.  Cobb-Douglas simulations illustrate endogenous variable paths.  The paper discusses a constant depletion rate, tragedy of the commons, and myopic resource owner. 

 

 

Regional Trade in a Three Country Model

This paper develops a three country model of constant cost production and trade.  The countries have identical Cobb-Douglas utility and balanced trade.  Country sizes and productivities determine whether trade is global between all three countries or “regional” 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 would be observed depending on the geographical distribution of production potential.