Kiel Working Papers, Kiel Institute for World Economics
No 1471:
Technological Change, Trade, and Endogenous Factor Endowments
Erich Gundlach and Albert de Vaal
Abstract: Factor endowments are usually taken as given in trade
theoretical analyses of technological change. We use the Deardorff (1974)
diagram to show how the steady state capital labor ratio endogenously
adjusts to technology shocks in a two-sector small open economy, an effect
which has largely been neglected in trade theory literature. We show that
ignoring the endogeneity of the capital labor ratio with respect to
technology shocks leads to biased predictions of changes in sectoral
production and trade. Imposing stylized facts of growth as restrictions, we
assess the relative size of the implied prediction bias that appears to
matter for empirical studies of trade
Keywords: Deardorff diagram, technology shock, factor endowments, factor bias, sector bias; (follow links to similar papers)
JEL-Codes: F11,; O41; (follow links to similar papers)
14 pages, December 2008
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Downloadable files:
KWP_1471_19122008.pdf 
Download Statistics
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design Joakim Ekebom
