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Predicting the Pattern of International Trade in the Neoclassical Model: A Synthesis

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  • Daniel Bernhofen

Abstract

I propose a framework that takes a set of conceivable outcomes as the primitive and a prediction is defined by identifying a subset on the set of conceivable outcomes. This notion of predictability serves as an organizing principle for characterizing pattern of trade predictions in single economy and integrated equilibrium formulations of the neoclassical trade model. I identify allocative efficiency as the unifying subset selection criterion for the different formulations of the neoclassical trade model, ranging from Ricardo’s (1817) original comparative advantage formulation to the multi-cone Heckscher-Ohlin specification with multiple countries, goods and factors.

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  • Daniel Bernhofen, "undated". "Predicting the Pattern of International Trade in the Neoclassical Model: A Synthesis," Discussion Papers 08/24, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:08/24
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    File URL: http://www.nottingham.ac.uk/gep/documents/papers/2008/08-24.pdf
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    References listed on IDEAS

    as
    1. Daniel Bernhofen, "undated". "Predicting the Factor Content of Foreign Trade: Theory and Evidence," Discussion Papers 07/11, University of Nottingham, GEP.
    2. Yong-Seok Choi & Pravin Krishna, 2004. "The Factor Content of Bilateral Trade: An Empirical Test," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 887-914, August.
    3. Richard A. Brecher & Ehsan U. Choudhri, 1993. "Some Empirical Support for the Heckscher-Ohlin Model of Production," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 272-285, May.
    4. 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.
    5. Daniel M. Bernhofen & John C. Brown, 2004. "A Direct Test of the Theory of Comparative Advantage: The Case of Japan," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 48-67, February.
    6. Daniel M. Bernhofen, "undated". "On the Magic Behind David Ricardo's Four Mystical Numbers," Discussion Papers 07/02, University of Nottingham, GEP.
    7. Selten, Reinhard, 1991. "Properties of a measure of predictive success," Mathematical Social Sciences, Elsevier, vol. 21(2), pages 153-167, April.
    8. Deardorff, Alan V, 1980. "The General Validity of the Law of Comparative Advantage," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 941-957, October.
    9. Helpman, Elhanan, 1984. "The Factor Content of Foreign Trade," Economic Journal, Royal Economic Society, vol. 94(373), pages 84-94, March.
    10. J. Peter Neary & Albert G. Schweinberger, 1986. "Factor Content Functions and the Theory of International Trade," Review of Economic Studies, Oxford University Press, vol. 53(3), pages 421-432.
    11. Brecher, Richard A. & Choudhri, Ehsan U., 1982. "The factor content of international trade without factor-price equalization," Journal of International Economics, Elsevier, vol. 12(3-4), pages 277-283, May.
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    Citations

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    Cited by:

    1. Daniel Bernhofen & Raymond Riezman, 2009. "Introduction: ‘New directions in international trade theory’," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(1), pages 1-3, October.
    2. Zhong, Weiqiong & An, Haizhong & Shen, Lei & Dai, Tao & Fang, Wei & Gao, Xiangyun & Dong, Di, 2017. "Global pattern of the international fossil fuel trade: The evolution of communities," Energy, Elsevier, vol. 123(C), pages 260-270.
    3. Demmou Lilas, 2009. "Déterminants et nature des spécialisations Nord-Sud : quelques enseignements tirés de la littérature empirique," Revue d'économie politique, Dalloz, vol. 119(1), pages 71-94.

    More about this item

    Keywords

    Predictability; pattern of trade; neoclassical model;

    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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