On the Factor Content of Trade

George Sorg-Langhans (), Clemens Struck () and Adnan Velic
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George Sorg-Langhans: Princeton University
Clemens Struck: University College Dublin

Economic Papers from Trinity College Dublin, Economics Department

Abstract: Theories of international trade have severe difficulties in explaining why, despite i) substantial differences in factor-proportions across industries and ii) considerable cross-country differences in capital-labor ratios, the iii) capital intensity of U.S imports does not vary systematically across countries. We propose a simple explanation: standard trade theories treat the distribution of productivity across industries as exogenous. In a standard macroeconomic model we show that endogenizing this driving force eradicates the gains from factor-proportions trade and can thus reconcile the three aforementioned stylized facts.

Keywords: factor-proportions trade; Heckscher-Ohlin-Vanek; macroeconomic general equilibrium models; endogenous growth; biased productivity (search for similar items in EconPapers)
JEL-codes: F11 F14 F41 O47 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2017-03, Revised 2018-01
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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