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Notes on factor price equality and biased technical change in a two-cone trade model

Daniel Becker () and Erich Gundlach ()

No 1300, Kiel Working Papers from Kiel Institute for the World Economy (IfW)

Abstract: We reconsider the effects of long-run economic growth on relative factor prices across cones of specialization. We model economic growth as exogenous technical change. Allowing for capital biased technical change with a sector bias and for endogenous commodity prices, we find that economic growth may increase or decrease factor price differences across cones. For a neutral demand side and capital biased growth in the most capital intensive sector, we find that economic growth encourages less factor price diversity across cones.

Keywords: Economic growth; Two cone trade model; Factor price equality (search for similar items in EconPapers)
JEL-codes: F11 O40 (search for similar items in EconPapers)
Date: 2006
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