The Singular Value Decomposition of a Technology Matrix

Eric Fisher

No 4566, CESifo Working Paper Series from CESifo

Abstract: This paper is the first application of the singular value decomposition in general equilibrium theory. Every technology matrix can be decomposed into three parts: (1) a definition of composite commodities; (2) a definition of composite factors; and (3) a simple map of composite factor prices into composite goods prices. This technique gives an orthogonal decomposition of the price space into two complementary subspaces: (1) vectors that generate the price cone; and (2) a basis that describe the flats on the production possibility frontier. This decomposition can be used easily to compute Rybczynski effects.

Keywords: singular value decomposition; international trade; Rybezynski; Stolper-Samuelson (search for similar items in EconPapers)
JEL-codes: D50 F10 (search for similar items in EconPapers)
Date: 2014
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Journal Article: Singular value decomposition of a technology matrix (2014)
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