IDEAS home Printed from https://ideas.repec.org/p/abn/wpaper/auwp2020-06.html
   My bibliography  Save this paper

Relative Prices and Empirical Trade Patterns

Author

Listed:
  • Nazif Durmaz
  • Henry Thompson

Abstract

This paper examines empirical links between relative prices and bilateral trade based on constant cost trade theory. The global models are built from the World Input-Output Database WIOD aggregated to three, four, and five regions and goods. The simple model assumes relative labor shares are relative prices and average relative price is the terms of trade. Trade patterns are complex among partially specialized regions. Model predictions are compared to observed net exports in seven different aggregations. Regression analysis also examines the effects of relative prices on the total bilateral net exports across models.

Suggested Citation

  • Nazif Durmaz & Henry Thompson, 2020. "Relative Prices and Empirical Trade Patterns," Auburn Economics Working Paper Series auwp2020-06, Department of Economics, Auburn University.
    • Handle: RePEc:abn:wpaper:auwp2020-06
    as

    Download full text from publisher

    File URL: https://cla.auburn.edu/econwp/Archives/2020/2020-06.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Donald Macdougallsir & Monica Dowley & Pauline Fox & Senta Pugh, 1962. "British And American Productivity Prices, And Exports: An Addendum," Oxford Economic Papers, Oxford University Press, vol. 14(3), pages 297-304.
    2. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    3. Falvey, Rodney Edward, 1981. "Comparative Advantage in a Multi-Factor World," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 401-413, June.
    4. Robert M. Stern, 1962. "British And American Productivity And Comparative Costs In International Trade," Oxford Economic Papers, Oxford University Press, vol. 14(3), pages 275-296.
    5. Federico Belotti & Alessandro Borin & Michele Mancini, 2021. "icio: Economic analysis with intercountry input–output tables," Stata Journal, StataCorp LP, vol. 21(3), pages 708-755, September.
    6. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    7. Arnaud Costinot & Dave Donaldson, 2012. "Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence," American Economic Review, American Economic Association, vol. 102(3), pages 453-458, May.
    8. Thompson,Henry, 2009. "International Economics," Cambridge Books, Cambridge University Press, number 9788175967199, October.
    9. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517, Elsevier.
    10. Ronald W. Jones, 1961. "Comparative Advantage and the Theory of Tariffs: A Multi-Country, Multi-Commodity Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 28(3), pages 161-175.
    11. McGilvray, James & Simpson, David, 1973. "The Commodity Structure of Anglo-Irish Trade," The Review of Economics and Statistics, MIT Press, vol. 55(4), pages 451-458, November.
    12. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
    13. Belotti,Federico & Borin,Alessandro & Mancini,Michele, 2020. "icio : Economic Analysis with Inter-Country Input-Output Tables in Stata," Policy Research Working Paper Series 9156, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," The World Bank Economic Review, World Bank, vol. 32(1), pages 163-182.
    2. Hausmann, Ricardo & Stock, Daniel P. & Yıldırım, Muhammed A., 2022. "Implied comparative advantage," Research Policy, Elsevier, vol. 51(8).
    3. Toraubally, Waseem A., 2022. "Strategic trading and Ricardian comparative advantage," Journal of Economic Behavior & Organization, Elsevier, vol. 195(C), pages 428-447.
    4. Carlos A. Cinquetti, 2018. "Comparative Advantages and Demand in the New Competitive Ricardian Models," Foreign Trade Review, , vol. 53(1), pages 29-48, February.
    5. Mihasina Harinaivo Andrianarimanana & Pu Yongjian, 2021. "Importance of the Improvement in the Agricultural Technology of Sub-Saharan Africa on Local Economic Development and International Trade," Sustainability, MDPI, vol. 13(5), pages 1-14, February.
    6. Elhanan Helpman, 2014. "Foreign Trade and Investment: Firm-level Perspectives," Economica, London School of Economics and Political Science, vol. 81(321), pages 1-14, January.
    7. Felbermayr Gabriel & Steininger Marina, 2019. "Revisiting the Euro’s Trade Cost and Welfare Effects," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(5-6), pages 917-956, October.
    8. Felbermayr, Gabriel & Gröschl, Jasmin & Heiland, Inga, 2022. "Complex Europe: Quantifying the cost of disintegration," Journal of International Economics, Elsevier, vol. 138(C).
    9. Stemmler, Henry, 2019. "Does automation lead to de-industrialization in emerging economies? Evidence from Brazil," University of Göttingen Working Papers in Economics 382, University of Goettingen, Department of Economics.
    10. Bahar, Dany & Rosenow, Samuel & Stein, Ernesto & Wagner, Rodrigo, 2019. "Export take-offs and acceleration: Unpacking cross-sector linkages in the evolution of comparative advantage," World Development, Elsevier, vol. 117(C), pages 48-60.
    11. Sposi, Michael, 2022. "Demographics and the evolution of global imbalances," Journal of Monetary Economics, Elsevier, vol. 126(C), pages 1-14.
    12. Hylke Vandenbussche & William Connell & Wouter Simons, 2022. "Global value chains, trade shocks and jobs: An application to Brexit," The World Economy, Wiley Blackwell, vol. 45(8), pages 2338-2369, August.
    13. Andrianarimanana, Mihasina Harinaivo & Yongjian, Pu & Rabezanahary Tanteliniaina, Mirindra Finaritra, 2023. "Assessment of the importance of climate, land, and soil on the global supply for agricultural products and global food security: Evidence from Madagascar," Food Policy, Elsevier, vol. 115(C).
    14. Foellmi, Reto & Hepenstrick, Christian & Torun, David, 2022. "Triangle Inequalities in International Trade: The Neglected Dimension," CEPR Discussion Papers 17118, C.E.P.R. Discussion Papers.
    15. Ketan Reddy & Subash Sasidharan, 2021. "A Portrait of Global Value Chain Linkages of Indian Manufacturing," Journal of Asian Economic Integration, , vol. 3(2), pages 235-250, September.
    16. Njike, Arnold, 2019. "Are African exports that weak ? A trade in value-added approach," MPRA Paper 97658, University Library of Munich, Germany.
    17. Stolpe, Michael, 1995. "Technology and the dynamics of specialization in open economies," Open Access Publications from Kiel Institute for the World Economy 738, Kiel Institute for the World Economy (IfW Kiel).
    18. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    19. Jonathan EATON & Samuel KORTUM & Francis KRAMARZ, 2016. "Firm-to-Firm Trade: Imports, exports, and the labor market," Discussion papers 16048, Research Institute of Economy, Trade and Industry (RIETI).
    20. Justin Caron & Thibault Fally & James Markusen, 2021. "Per capita income and the demand for skills," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 12, pages 251-268, World Scientific Publishing Co. Pte. Ltd..

    More about this item

    Keywords

    relative prices; comparative advantage; trade patterns; partial specialization;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:abn:wpaper:auwp2020-06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hyeongwoo Kim (email available below). General contact details of provider: https://edirc.repec.org/data/deaubus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.