The Experts below are selected from a list of 969 Experts worldwide ranked by ideXlab platform
Frank Westermann - One of the best experts on this subject based on the ideXlab platform.
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Factor Price Equalization the cointegration approach revisited
Review of World Economics, 2001Co-Authors: Helge Berger, Frank WestermannAbstract:Absolute Factor Price Equalization across countries is a key prediction of the Heckscher-Ohlin-Samuleson model of international trade, one of the more influential “workhorse” models in economics. Despite its theoretical might, the Factor Price Equalization hypothesis has received surprisingly little empirical support. In an important exception to the rule, Burgman and Geppert (1993) argue that this might be due to the neglect of the non-stationarity of the time series under consideration. And indeed, applying a cointegration approach to (nominal) unit labor costs in six major industrialized countries (Canada, France, Germany, Japan, the United Kingdom, and the United States), they find evidence of long-run Factor Price co-movement. This finding can be interpreted as being in line with Equalization of Factor Prices amongst these countries.
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Factor Price Equalization the cointegration approach revisited
Social Science Research Network, 2001Co-Authors: Helge Berger, Frank WestermannAbstract:Factor Price equality across countries is an important implication of the Heckscher-Ohlin-Samuelson model of international trade. Although an influential theoretical result, the model has received surprisingly little empirical support. Burgman and Geppert (1993) argue that this might be due to the neglect of the non-stationarity property of the time series under consideration. Using a cointegration approach, they find strong evidence pointing towards a long-run relationship between Factor Prices in six major industrialized countries. The present paper shows, however, that there is only limited evidence of cointegration once the finite sample bias is taken into account. Moreover, there is only weak evidence of a significant cointegrating relationship when real (rather than nominal) labor cost data are used. There is some indication of long-run co-movements of real Factor Prices when using the statistically more powerful bivariate tests rather than a multivariate framework.
Helge Berger - One of the best experts on this subject based on the ideXlab platform.
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Factor Price Equalization the cointegration approach revisited
Review of World Economics, 2001Co-Authors: Helge Berger, Frank WestermannAbstract:Absolute Factor Price Equalization across countries is a key prediction of the Heckscher-Ohlin-Samuleson model of international trade, one of the more influential “workhorse” models in economics. Despite its theoretical might, the Factor Price Equalization hypothesis has received surprisingly little empirical support. In an important exception to the rule, Burgman and Geppert (1993) argue that this might be due to the neglect of the non-stationarity of the time series under consideration. And indeed, applying a cointegration approach to (nominal) unit labor costs in six major industrialized countries (Canada, France, Germany, Japan, the United Kingdom, and the United States), they find evidence of long-run Factor Price co-movement. This finding can be interpreted as being in line with Equalization of Factor Prices amongst these countries.
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Factor Price Equalization the cointegration approach revisited
Social Science Research Network, 2001Co-Authors: Helge Berger, Frank WestermannAbstract:Factor Price equality across countries is an important implication of the Heckscher-Ohlin-Samuelson model of international trade. Although an influential theoretical result, the model has received surprisingly little empirical support. Burgman and Geppert (1993) argue that this might be due to the neglect of the non-stationarity property of the time series under consideration. Using a cointegration approach, they find strong evidence pointing towards a long-run relationship between Factor Prices in six major industrialized countries. The present paper shows, however, that there is only limited evidence of cointegration once the finite sample bias is taken into account. Moreover, there is only weak evidence of a significant cointegrating relationship when real (rather than nominal) labor cost data are used. There is some indication of long-run co-movements of real Factor Prices when using the statistically more powerful bivariate tests rather than a multivariate framework.
Clinton R. Shiells - One of the best experts on this subject based on the ideXlab platform.
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Dynamic Factor Price Equalization and International Convergence
2009Co-Authors: Joseph Francois, Clinton R. ShiellsAbstract:We offer a duality-based methodology for incorporating multi-sector effects of international trade into open economy macroeconomic models, developing the concepts of the dynamic Factor Price Equalization set and the integrated intertemporal equilibrium. Under this approach, the aggregate production function depends on output Prices and Factor endowment stocks. It preserves all of the structure of a standard GDP function from the trade theory literature. In a two-country version of the model considered below, we examine the properties of the dynamic Factor Price Equalization set. If the global economy is initially outside of this set, the equations of motion will pull the economy back into this set. Inside the dynamic FPE set, Factor Prices are equalized internationally, and with identical tastes and technology, the economy can be regarded as a fully integrated world equilibrium in a dynamic sense (the integrated intertemporal equilibrium). In this equilibrium, all of the standard properties of a closed economy one-sector neoclassical growth model hold, ruling out cycles and chaos, and allowing us to characterize the evolution of international inequality and the persistence of productivity and endowment shocks. Working from the integrated intertemporal equilibrium, we identify properties of persistence linked to inequality and real economic shocks. Cross-country differences in per capita incomes and wealth, and the Factor content of trading patterns, may persist over time and even into the new steady state. This provides yet another reason why we might observe lack of income convergence internationally. In addition, real shocks in one country may be transmitted to the other country through Factor markets and product Prices, and may have persistent effects into the steady-state as well. The model can also generate an endogenous Balassa-Samuelson effect.
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dynamic Factor Price Equalization international convergence
Social Science Research Network, 2008Co-Authors: Joseph Francois, Clinton R. ShiellsAbstract:We offer a duality-based methodology for incorporating multi-sector effects of international trade into open economy macroeconomic models, developing the concepts of the dynamic Factor Price Equalization set and the integrated intertemporal equilibrium. Under this approach, the aggregate production function depends on output Prices and Factor endowment stocks. It preserves all of the structure of a standard GDP function from the trade theory literature. In a two-country version of the model considered below, we examine the properties of the dynamic Factor Price Equalization set. If the global economy is initially outside of this set, the equations of motion will pull the economy back into this set. Inside the dynamic FPE set, Factor Prices are equalized internationally, and with identical tastes and technology, the economy can be regarded as a fully integrated world equilibrium in a dynamic sense (the integrated intertemporal equilibrium). In this equilibrium, all of the standard properties of a closed economy one-sector neoclassical growth model hold, ruling out cycles and chaos, and allowing us to characterize the evolution of international inequality and the persistence of productivity and endowment shocks. Working from the integrated intertemporal equilibrium, we identify properties of persistence linked to inequality and real economic shocks. Cross-country differences in per capita incomes and wealth, and the Factor content of trading patterns, may persist over time and even into the new steady state. This provides yet another reason why we might observe lack of income convergence internationally. In addition, real shocks in one country may be transmitted to the other country through Factor markets and product Prices, and may have persistent effects into the steady-state as well. Outside the steady-state, the relative Price of labor intensive goods/services also trends with the evolution of the capital stock.
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dynamic Factor Price Equalization international income convergence
Dynamic Factor Price Equalization & International Income Convergence, 2008Co-Authors: Clinton R. Shiells, Joseph FrancoisAbstract:The paper develops a tractable way to incorporate the micro structure of dual models of international trade into a standard class of dynamic open-economy macro models. In the process, it develops the concept of a dynamic Factor Price Equalization set and an integrated intertemporal equilibrium. A number of results are obtained concerning trade, growth, and income convergence. Countries with higher capital/labor ratios may stay wealthier over time, both in the transition and in the new steady state. Real shocks in one country will be transmitted to the other country through the Factor markets and traded goods Prices.
Joseph Francois - One of the best experts on this subject based on the ideXlab platform.
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Dynamic Factor Price Equalization and International Convergence
2009Co-Authors: Joseph Francois, Clinton R. ShiellsAbstract:We offer a duality-based methodology for incorporating multi-sector effects of international trade into open economy macroeconomic models, developing the concepts of the dynamic Factor Price Equalization set and the integrated intertemporal equilibrium. Under this approach, the aggregate production function depends on output Prices and Factor endowment stocks. It preserves all of the structure of a standard GDP function from the trade theory literature. In a two-country version of the model considered below, we examine the properties of the dynamic Factor Price Equalization set. If the global economy is initially outside of this set, the equations of motion will pull the economy back into this set. Inside the dynamic FPE set, Factor Prices are equalized internationally, and with identical tastes and technology, the economy can be regarded as a fully integrated world equilibrium in a dynamic sense (the integrated intertemporal equilibrium). In this equilibrium, all of the standard properties of a closed economy one-sector neoclassical growth model hold, ruling out cycles and chaos, and allowing us to characterize the evolution of international inequality and the persistence of productivity and endowment shocks. Working from the integrated intertemporal equilibrium, we identify properties of persistence linked to inequality and real economic shocks. Cross-country differences in per capita incomes and wealth, and the Factor content of trading patterns, may persist over time and even into the new steady state. This provides yet another reason why we might observe lack of income convergence internationally. In addition, real shocks in one country may be transmitted to the other country through Factor markets and product Prices, and may have persistent effects into the steady-state as well. The model can also generate an endogenous Balassa-Samuelson effect.
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dynamic Factor Price Equalization international convergence
Social Science Research Network, 2008Co-Authors: Joseph Francois, Clinton R. ShiellsAbstract:We offer a duality-based methodology for incorporating multi-sector effects of international trade into open economy macroeconomic models, developing the concepts of the dynamic Factor Price Equalization set and the integrated intertemporal equilibrium. Under this approach, the aggregate production function depends on output Prices and Factor endowment stocks. It preserves all of the structure of a standard GDP function from the trade theory literature. In a two-country version of the model considered below, we examine the properties of the dynamic Factor Price Equalization set. If the global economy is initially outside of this set, the equations of motion will pull the economy back into this set. Inside the dynamic FPE set, Factor Prices are equalized internationally, and with identical tastes and technology, the economy can be regarded as a fully integrated world equilibrium in a dynamic sense (the integrated intertemporal equilibrium). In this equilibrium, all of the standard properties of a closed economy one-sector neoclassical growth model hold, ruling out cycles and chaos, and allowing us to characterize the evolution of international inequality and the persistence of productivity and endowment shocks. Working from the integrated intertemporal equilibrium, we identify properties of persistence linked to inequality and real economic shocks. Cross-country differences in per capita incomes and wealth, and the Factor content of trading patterns, may persist over time and even into the new steady state. This provides yet another reason why we might observe lack of income convergence internationally. In addition, real shocks in one country may be transmitted to the other country through Factor markets and product Prices, and may have persistent effects into the steady-state as well. Outside the steady-state, the relative Price of labor intensive goods/services also trends with the evolution of the capital stock.
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dynamic Factor Price Equalization international income convergence
Dynamic Factor Price Equalization & International Income Convergence, 2008Co-Authors: Clinton R. Shiells, Joseph FrancoisAbstract:The paper develops a tractable way to incorporate the micro structure of dual models of international trade into a standard class of dynamic open-economy macro models. In the process, it develops the concept of a dynamic Factor Price Equalization set and an integrated intertemporal equilibrium. A number of results are obtained concerning trade, growth, and income convergence. Countries with higher capital/labor ratios may stay wealthier over time, both in the transition and in the new steady state. Real shocks in one country will be transmitted to the other country through the Factor markets and traded goods Prices.
Avik Chakrabarti - One of the best experts on this subject based on the ideXlab platform.
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Factor Price Equalization beyond a cubic world
Economic Theory, 2006Co-Authors: Avik ChakrabartiAbstract:The importance of Factor Price Equalization (FPE) is widely recognized in economics. The FPE theorem states that, absent any Factor intensity reversal, Factor Prices are equal across countries with identical technologies and product mixes. In a two-Factor-two-good-two-country Heckscher-Ohlin model this is equivalent to countries’ Factor endowments being contained in the diversification cone defined by goods’ Factor intensities. This paper identifies a condition, stated in terms of the allocation of Factor endowments across countries relative to the demand for and the Factor intensities of goods, that is necessary and sufficient for FPE in a world with arbitrary number of countries, goods and Factors.
