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Estimating the Heckscher-Ohlin model: Inverting the inverse matrix

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  • Thompson, Henry

Abstract

This paper estimates the Heckscher-Ohlin model with annual US data from 1949 to 2006 for outputs of manufactures and services with inputs of fixed capital assets and the labor force. Difference equation and error correction regressions provide estimated coefficients for the comparative static system. Tariffs on manufactures primarily raise the capital return in the estimated Stolper-Samuelson results. Factor price equalization does not hold for labor and capital. Inverting the estimated system inverse matrix provides evidence on production. The suggestions are capital biased production of manufactures, strong substitution of capital for labor, and strong labor substitution in manufactures.

Suggested Citation

  • Thompson, Henry, 2011. "Estimating the Heckscher-Ohlin model: Inverting the inverse matrix," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 185-192, April.
    • Handle: RePEc:eee:reveco:v:20:y:2011:i:2:p:185-192
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    References listed on IDEAS

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    1. Jones, Ronald W. & Peter Neary, J., 1984. "The positive theory of international trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 1, pages 1-62, Elsevier.
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    5. Horn, Henrik, 1983. "Some implications of non-homotheticity in production in a two-sector general equilibrium model with monopolistic competition," Journal of International Economics, Elsevier, vol. 14(1-2), pages 85-101, February.
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    Cited by:

    1. Kim, Hyeongwoo & Thompson, Henry, 2014. "Wages in a factor proportions model with energy input," Economic Modelling, Elsevier, vol. 36(C), pages 495-501.
    2. Thompson, Alexi & Thompson, Henry, 2021. "The imputed effect of US tariffs on wages," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 191-197.
    3. T.V.S.Ramamohan Rao, 2011. "Contemporary Relevance and Ongoing Controversies Related to the CES Production Function," Journal of Quantitative Economics, The Indian Econometric Society, vol. 9(2), pages 36-57, July.

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