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Can Comparative Advantage Explain the Growth of us Trade?

Alejandro Cunat () and Marco Maffezzoli ()

Economic Journal, 2007, vol. 117, issue 520, 583-602

Abstract: We present a dynamic comparative advantage model in which moderate reductions in import tariffs can generate sizable increases in trade volumes over time. A fall in tariffs has two effects. First, for given factor endowments, it raises the degree of specialisation, leading to a larger volume of trade in the short run. Second, it raises the factor price of each country's abundant factor, leading to diverging paths of relative factor endowments and a rising degree of specialisation. A simulation exercise shows that a fall in tariffs produces a disproportional increase in the trade share of output as in the data. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

Date: 2007
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Related works:
Working Paper: Can Comparative Advantage Explain the Growth of US Trade? (2005) Downloads
Working Paper: Can Comparative Advantage Explain the Growth of US Trade? (2005) Downloads
Working Paper: Can comparative advantage explain the growth of US trade? (2005) Downloads
Working Paper: Can Comparative Advantage Explain the Growth of US Trade? (2003) Downloads
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