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On the Magic Behind David Ricardo's Four Mystical Numbers

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  • Daniel M. Bernhofen

Abstract

Building on Ruffin's recent interpretation of Ricardo's four numbers as labour embodied in trade rather than domestic labour coefficients, I identify the magic behind these four mystical numbers. I show that the magic lies in Ricardo's underlying logic in predicting the pattern of international trade. Using a single graphical framework, I show that Ricardo's logic provides a device for a unified treatment of the commodity and the factor content predictions of international trade with an arbitrary number of goods, factors and countries.

Suggested Citation

  • Daniel M. Bernhofen, 2007. "On the Magic Behind David Ricardo's Four Mystical Numbers," Discussion Papers 07/02, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:07/02
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    File URL: https://www.nottingham.ac.uk/gep/documents/papers/2007/07-02.pdf
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    References listed on IDEAS

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    1. Alan V. Deardorff, 2011. "The General Validity of the Heckscher-Ohlin Theorem," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 11, pages 91-103, World Scientific Publishing Co. Pte. Ltd..
    2. Piero Sraffa & L. Einaudi, 1930. "An Alleged Correction of Ricardo," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 44(3), pages 539-545.
    3. Alan V. Deardorff, 2011. "The General Validity of the Law of Comparative Advantage," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 10, pages 73-90, World Scientific Publishing Co. Pte. Ltd..
    4. Maneschi, Andrea, 2004. "The true meaning of David Ricardo's four magic numbers," Journal of International Economics, Elsevier, vol. 62(2), pages 433-443, March.
    5. Ethier, Wilfred J., 1984. "Higher dimensional issues in trade theory," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 3, pages 131-184, Elsevier.
    6. Daniel M. Bernhofen & John C. Brown, 2005. "An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan," American Economic Review, American Economic Association, vol. 95(1), pages 208-225, March.
    7. Roy J. Ruffin, 2002. "David Ricardo's Discovery of Comparative Advantage," History of Political Economy, Duke University Press, vol. 34(4), pages 727-748, Winter.
    8. Daniel M. Bernhofen, 2005. "Gottfried Haberler's 1930 Reformulation of Comparative Advantage in Retrospect," Review of International Economics, Wiley Blackwell, vol. 13(5), pages 997-1000, November.
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    Cited by:

    1. Daniel Bernhofen, 2009. "Predicting the pattern of international trade in the neoclassical model: a synthesis," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(1), pages 5-21, October.

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