Fundamental Theorem on the Relationship between Trade Balances in Value Added and Gross Terms: Amendment
This paper amends Kuboniwa (2014). We present a proof of a fundamental theorem on the relationship between trade balances in value added and gross terms in a general model with many countries and many sectors: the total sum of a country’s trade balances with all other countries measured in value added equals that in gross terms. This theorem implies that the total sum of differentials between balances in value added and those in gross terms equals zero. Using an aggregated World Input-Output data (WIOD) of Groningen University with eight countries (BRICs, the USA, the EU, Japan and the rest of the world (ROW)) and 20 sectors for 2010, we show an empirical evidence of the theorem.
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- Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
- Marcel Timmer & Abdul A. Erumban & Reitze Gouma & Bart Los & Umed Temurshoev & Gaaitzen J. de Vries & I–aki Arto & Valeria Andreoni AurŽlien Genty & Frederik Neuwahl & JosŽ M. Rueda?Cantuche & Joseph , 2012. "The World Input-Output Database (WIOD): Contents, Sources and Methods," IIDE Discussion Papers 20120401, Institue for International and Development Economics.
- Robert Stehrer, 2012. "Trade in Value Added and the Valued Added in Trade," wiiw Working Papers 81, The Vienna Institute for International Economic Studies, wiiw.
- Kuboniwa, Masaaki, 2014. "Trade in Value Added Revisited: A Comment on R. Johnson and G. Noguera, Accounting for Intermediates: Production Sharing and Trade in Value Added," Discussion Paper Series 598, Institute of Economic Research, Hitotsubashi University.
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