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Singular value decomposition of a technology matrix

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  • Eric O'N. Fisher

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type="main" xml:lang="en"> This paper is the first application of the singular value decomposition (SVD) in general equilibrium theory. Every technology matrix can be decomposed into three parts: a definition of composite commodities; a definition of composite factors; and 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: vectors that generate the price cone; and a basis that describe the flats on the production possibility frontier. This decomposition can be used easily to compute Rybczynski effects.

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  • Eric O'N. Fisher, 2014. "Singular value decomposition of a technology matrix," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 37-52, March.
    • Handle: RePEc:bla:ijethy:v:10:y:2014:i:1:p:37-52
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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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