Notes on factor price equality and biased technical change in a two-cone trade model
Daniel Becker () and
Erich Gundlach ()
No 1300, Kiel Working Papers from Kiel Institute for the World Economy (IfW)
We reconsider the effects of long-run economic growth on relative factor prices across cones of specialization. We model economic growth as exogenous technical change. Allowing for capital biased technical change with a sector bias and for endogenous commodity prices, we find that economic growth may increase or decrease factor price differences across cones. For a neutral demand side and capital biased growth in the most capital intensive sector, we find that economic growth encourages less factor price diversity across cones.
Keywords: Economic growth; Two cone trade model; Factor price equality (search for similar items in EconPapers)
JEL-codes: F11 O40 (search for similar items in EconPapers)
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Working Paper: Notes on factor price equality and biased technical change in a two-cone trade model (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:zbw:ifwkwp:1300
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