An appraisal of alternative Ricardian trade models

Ariel Dvoskin () and Gabriel Brondino ()
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Ariel Dvoskin: Central Bank of Argentina
Gabriel Brondino: Universita Cattolica del Sacro Cuore, Piacenza

No 2022104, BCRA Working Paper Series from Central Bank of Argentina, Economic Research Department

Abstract: A prevalent feature of the global economy is the relevance of trade in intermediates due to production fragmentation. This phenomenon has led to the revival and development of trade models that include inter-industry relations. A wide variety of Ricardian trade models cope with this feature. In this article, we develop a Sraffa-Leontief framework to compare and appraise these models. The models are distinguished by their underlying theory of distribution and the assumptions about the degree of international capital mobility. We compare the predicted effects on employment and the distribution of national income. Moreover, we assess if the model assures the existence of a complete trade pattern, i.e. if it can assure that all countries engage in trade (like the principle of comparative advantage predicts). It follows from our appraisal that it is not warranted that all countries can engage in international trade, even if they want to. In other words, if allowed to work, the "strong balancing forces" may not make a country internationally competitive when there is production fragmentation.

Keywords: Ricardian trade models; comparative advantages; desertification (search for similar items in EconPapers)
JEL-codes: B27 B51 F11 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2022-11
New Economics Papers: this item is included in nep-hme and nep-int
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