Consumption efficiency hypothesis and the HOS model: Some counterintuitive results
AbstractWe show how accommodation of the consumption efficiency hypothesis can explain the existence of involuntary unemployment in the two-by-two Heckscher-Ohlin-Samuelson (HOS) model. Although the workers consume both the commodities their nutritional efficiency depends on the consumption of one commodity only. An increase in the relative price of the capital-intensive (labour-intensive) good raises (lowers) the effective employment in the economy. The effects of commodity price changes on the output levels of the two sectors might be perverse. These results are different from the standard HOS results.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5325.
Date of creation: 15 Jun 2007
Date of revision:
Consumption efficiency hypothesis; General equilibrium; Heckscher-Ohlin-Samuelson model; Effective employment; Output composition;
Other versions of this item:
- Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2008. "Consumption efficiency hypothesis and the HOS model: Some counterintuitive results," Research in Economics, Elsevier, vol. 62(2), pages 64-71, June.
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-20 (All new papers)
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