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A Dynamic Specific-Factors Model of International Trade

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Jonathan Eaton

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Abstract

In a dynamic economy land and capital serve not only as factors of production but as assets which individuals use to transfer income from workinq periods to retirement. Static models of international trade based on the specific-factors model incorporate only the first of these. Once the second is recognized the supply of capital and evaluation of land can be derived from underlying intertemporal optimization behavior.Changes in the terms of trade and in the endowments of fixed factors do not necessarily have the same effects on factor prices and the composition of output as they do in the static specific-factors model. Changes in these variables affect both total savings and the amount of savings that is diverted toward investment in land. Results derived from the traditional static model are more likely to emerge when the sector using land as a factor of production has a higher labor share than the sector using capital. In this case the land-using sector dominates factor markets more than asset markets.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1479.

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Date of creation: Aug 1987
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Handle: RePEc:nbr:nberwo:1479

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  1. Calvo, Guillermo A & Kotlikoff, Laurence J & Rodriguez, Carlos Alfredo, 1979. "The Incidence of a Tax on Pure Rent: A New (?) Reason for an Old Answer," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 869-74, August. [Downloadable!] (restricted)
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  2. Joel Fried, 1980. "The Intergenerational Distribution of the Gains from Technical Change and from International Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 13(1), pages 65-81, February. [Downloadable!] (restricted)
  3. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467. [Downloadable!] (restricted)
  4. Buiter, Willem H, 1981. "Time Preference and International Lending and Borrowing in an Overlapping-Generations Model," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 769-97, August. [Downloadable!] (restricted)
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  5. Mussa, Michael, 1974. "Tariffs and the Distribution of Income: The Importance of Factor Specificity, Substitutability, and Intensity in the Short and Long Run," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1191-1203, Nov.-Dec.. [Downloadable!] (restricted)
  6. Stiglitz, Joseph E, 1970. "Factor Price Equalization in a Dynamic Economy," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 456-88, May-June. [Downloadable!] (restricted)
  7. Peter B. Kenen, 1965. "Nature, Capital, and Trade," Journal of Political Economy, University of Chicago Press, vol. 73, pages 437. [Downloadable!] (restricted)
  8. Kareken, John & Wallace, Neil, 1977. "Portfolio autarky: A welfare analysis," Journal of International Economics, Elsevier, vol. 7(1), pages 19-43, February. [Downloadable!] (restricted)
  9. Christophe Chamley & Wright, Brian D. Wright, 1983. "Fiscal Incidence in a Dynamic Life-Cycle Model with Land," Cowles Foundation Discussion Papers 666, Cowles Foundation, Yale University. [Downloadable!]
  10. Srinivasan, T. N., 1983. "International factor movements, commodity trade and commercial policy in a specific factor model," Journal of International Economics, Elsevier, vol. 14(3-4), pages 289-312, May. [Downloadable!] (restricted)
  11. Feldstein, Martin S, 1977. "The Surprising Incidence of a Tax on Pure Rent: A New Answer to an Old Question," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 349-60, April. [Downloadable!] (restricted)
  12. Brecher, Richard A. & Findlay, Ronald, 1983. "Tariffs, foreign capital and national welfare with sector-specific factors," Journal of International Economics, Elsevier, vol. 14(3-4), pages 277-288, May. [Downloadable!] (restricted)
  13. Findlay, Ronald, 1978. "An "Austrian" Model of International Trade and Interest Rate Equalization," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 989-1007, December. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Erling Steigum, 2001. "Trade Unions and the Burden of the Public Debt," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  2. James E. Rauch, 1991. "Economic Development, Urban Underemployment, and Income Inequality," NBER Working Papers 3758, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Peter G. Mavromatis & George Verikios, 2008. "Does it Matter Whether Market Distortions are Evaluated Using Comparative-statics or Dynamics?," Centre of Policy Studies/IMPACT Centre Working Papers g-178, Monash University, Centre of Policy Studies/IMPACT Centre. [Downloadable!]
  4. Graziella Bertocchi, 2007. "The Vanishing Bequest Tax: The Comparative Evolution of Bequest Taxation in Historical Perspective," IZA Discussion Papers 2578, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Serdar Sayan, 2002. "Dynamic Heckscher-Ohlin Results from a 2x2x2x2 Overlapping Generations Model with Unequal Population Growth Rates," Departmental Working Papers 0201, Bilkent University, Department of Economics. [Downloadable!]
    Other versions:
  6. Ronald Fischer, 1999. "Income distribution and Trade Liberalization," Documentos de Trabajo 67, Centro de Economía Aplicada, Universidad de Chile. [Downloadable!]
  7. Petrucci, Alberto, 2006. "Wealth Accumulation and Growth in a Specific-Factors Model of Trade and Finance," Economics & Statistics Discussion Papers esdp06029, University of Molise, Dept. SEGeS. [Downloadable!]
  8. Fidel Pérez Sebastián & María Dolores Guilló, 2003. "The Curse And Blessing Of Fixed Specific Factors In Small-Open Economies," Working Papers. Serie AD 2003-36, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
    Other versions:
  9. Graziella Bertocchi, 2007. "The Comparative Evolution of Bequest Taxation in Historical Perspective," Center for Economic Research (RECent) 005, University of Modena and Reggio E., Dept. of Economics. [Downloadable!]
  10. Wei-Bin Zhang, 1995. "A Two-Country Dynamic Trade Model With Multiple Groups," International Economic Journal, Korean International Economic Association, vol. 9(3), pages 67-80, October. [Downloadable!] (restricted)
  11. Kyung-Soo Kim & Jaewoo Lee, 2001. "Asset Price And Current Account Dynamics," International Economic Journal, Korean International Economic Association, vol. 15(3), pages 85-108, October. [Downloadable!] (restricted)
  12. Jonathan Eaton, 1988. "Foreign-Owned Land," NBER Working Papers 1512, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Bertocchi, Graziella, 2003. "The Law of Primogeniture and the Transition from Landed Aristocracy to Industrial Democracy," CEPR Discussion Papers 3723, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  14. Alex Mourmouras & Peter Rangazas, 2009. "Reconciling Kuznets and Habbakuk in a unified growth theory," Journal of Economic Growth, Springer, vol. 14(2), pages 149-181, June. [Downloadable!] (restricted)
  15. Christian Keuschnigg, 1996. "Overshooting adjustment to tariff liberalization," Open Economies Review, Springer, vol. 7(3), pages 237-255, July. [Downloadable!] (restricted)
  16. Seung-Gwan Baek, 1996. "Favorable External Shocks, Sectoral Adjustment and De-industrialization in Non-Oil Producing Economies," Center for International and Development Economics Research, Working Paper Series 1038, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
  17. Jonathan Skinner, 1989. "Housing Wealth and Aggregate Saving," NBER Working Papers 2842, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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