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Trade and Foreign Capital: Income Redistribution in Simulated Trade Models

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  • Michael Thompson

Abstract

The present paper compares quantitative impacts of a free trade "program" of 1% price changes across simulations of general equilibrium models of countries and aggregates of skilled labor. These simulations of factor proportions and specific factors models illustrate two quantitative properties of competitive models of production and trade. First, factor intensity has a much stronger influence than factor substitution on the pattern of income redistribution due to price changes and foreign capital. Second, price changes associated with trade have a much stronger impact than foreign capital.

Suggested Citation

  • Michael Thompson, 2002. "Trade and Foreign Capital: Income Redistribution in Simulated Trade Models," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0208, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper0208
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp0208.pdf
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    References listed on IDEAS

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    1. Henry Thompson, 1995. "Free trade and income redistribution in some developing and newly industrialized countries," Open Economies Review, Springer, vol. 6(3), pages 265-280, July.
    2. John S. Chipman, 2009. "The Theory of International Trade," Books, Edward Elgar Publishing, number 3017.
    3. Ethier, Wilfred, 1974. "Some of the theorems of international trade with many goods and factors," Journal of International Economics, Elsevier, vol. 4(2), pages 199-206, May.
    4. Chang, Winston W, 1979. "Some Theorems of Trade and General Equilibrium with Many Goods and Factors," Econometrica, Econometric Society, vol. 47(3), pages 709-726, May.
    5. Henry Thompson, 2000. "International Markets," World Scientific Book Chapters,in: International Economics Global Markets and International Competition, chapter 1, pages 3-37 World Scientific Publishing Co. Pte. Ltd..
    6. Thompson, Henry, 1997. "Free trade and income redistribution across labor groups: Comparative statics for the U.S. economy," International Review of Economics & Finance, Elsevier, vol. 6(2), pages 181-192.
    7. Clark, Don P. & Hofler, Richard & Thompson, Henry, 1988. "Separability of capital and labor in US manufacturing," Economics Letters, Elsevier, vol. 26(2), pages 197-201.
    8. N/A, 1985. "General Policy," India Quarterly: A Journal of International Affairs, , vol. 41(1), pages 74-79, January.
    9. N/A, 1985. "General Policy," India Quarterly: A Journal of International Affairs, , vol. 41(1), pages 112-117, January.
    10. Jones, Ronald W & Scheinkman, Jose A, 1977. "The Relevance of the Two-Sector Production Model in Trade Theory," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 909-935, October.
    11. Shoven, John B. & Whalley, John, 1972. "A general equilibrium calculation of the effects of differential taxation of income from capital in the U.S," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 281-321, November.
    12. Thompson, Henry & Clark, Don P., 1983. "Factor movements with three factors and two goods in the U.S. economy," Economics Letters, Elsevier, vol. 12(1), pages 53-60.
    13. Clark, Don P & Thompson, Henry, 1990. "Factor Migration and Income Distribution in Some Developing Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 42(2), pages 131-140, April.
    14. Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226036335, December.
    15. Thompson, Henry, 1994. "An investigation into the quantitative properties of the specific factors model of international trade," Japan and the World Economy, Elsevier, vol. 6(4), pages 375-388, December.
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    Keywords

    free trade; foreign capital;

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