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 includes the relative price comparisons for all trading opportunities across other countries. Multilateral comparative advantage successfully predicts the multilateral trade pattern.

Factor Tariffs and Import Competing Supply

A tariff in neoclassical economy producing with a domestic factor and an imported factor lowers import and output. In an economy with import competing supply, income may increase. The supply elasticity as well as substitution, factor shares, and income shares determine adjustments to a tariff.

 

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 both 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 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 considers a constant depletion rate, a tragedy of the commons, and a myopic resource owner.