AN INTERPRETATION OF THE FACTOR CONTENT OF TRADE

Alan Deardorff and Robert Staiger

Chapter 38 in Comparative Advantage, Growth, and the Gains from Trade and Globalization:A Festschrift in Honor of Alan V Deardorff, 2011, pp 531-545 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThis paper shows that the factor content of trade can be used to indicate effects of trade on relative factor prices. Factor prices in two trading equilibria can be compared by comparing instead their two ‘equivalent autarky equilibria’ constructed by changing factor endowments by the factor content of trade. Using relationships between autarky factor prices and factor endowments, several relationships are derived between factor prices with trade and its factor content. The most general result is a positive correlation between relative changes in the factor content of trade, appropriately normalized, and proportional changes in factor prices.

Keywords: Comparative Advantage; Trade And Growth; Globalization; Computational Modeling; Trade Policy Analysis (search for similar items in EconPapers)
Date: 2011
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Journal Article: An interpretation of the factor content of trade (1988)
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