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The Empirics of General Equilibrium Trade Theory: What Have We Learned?

Listed author(s):
  • Daniel M. Bernhofen

This paper provides a selective survey of over half a century of research linking the neoclassical trade model to the data. Tensions between restrictive formulations of the model and real world complexities have launched a research agenda aimed at refining and reformulating theory to provide more convincing links between theoretical specification and empirical research design. Three lessons stand out. First, competitive and new trade theory models are complementary rather than competing ways to look at many existing empirical regularities. Second, the Ricardian formulation has proved to be a useful framework for structural estimation exercises regarding the pattern of international specialization. Third, empirical confirmations of the core predictions of the model provide scientific support for employing the competitive trade model in structural estimation.

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File URL: http://www.nottingham.ac.uk/gep/documents/papers/2010/10-24.pdf
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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 10/24.

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Handle: RePEc:not:notgep:10/24
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  1. Bernhofen, Daniel M. & Brown, John C., 2009. "Testing the general validity of the Heckscher-Ohlin Theorem: the natural experiment of Japan," CCES Discussion Paper Series 13, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
  2. Yong_Seok Choi & Pravin Krishna, 2000. "The Factor Content of Bilateral Trade:an Empirical Test," Working Papers 2000-11, Brown University, Department of Economics.
  3. Davis, Donald R. & David E. Weinstein & Scott C. Bradford & Kazushige Shimpo, 1997. "Using International and Japanese Regional Data to Determine When the Factor Abundance Theory of Trade Works," American Economic Review, American Economic Association, vol. 87(3), pages 421-446, June.
  4. Nunn, Nathan, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," Scholarly Articles 4686801, Harvard University Department of Economics.
  5. Debaere, Peter & Demiroglu, Ufuk, 2003. "On the similarity of country endowments," Journal of International Economics, Elsevier, vol. 59(1), pages 101-136, January.
  6. Donald R. Davis & David E. Weinstein, 1998. "An Account of Global Factor Trade," Harvard Institute of Economic Research Working Papers 1849, Harvard - Institute of Economic Research.
  7. Xiang, Chong, 2007. "Diversification cones, trade costs and factor market linkages," Journal of International Economics, Elsevier, vol. 71(2), pages 448-466, April.
  8. Do, Quy-Toan & Levchenko, Andrei A., 2006. "Comparative advantage, demand for external finance, and financial development," Policy Research Working Paper Series 3889, The World Bank.
  9. Arnaud Costinot, 2009. "An Elementary Theory of Comparative Advantage," Econometrica, Econometric Society, vol. 77(4), pages 1165-1192, 07.
  10. John Romalis, 2004. "Factor Proportions and the Structure of Commodity Trade," American Economic Review, American Economic Association, vol. 94(1), pages 67-97, March.
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  13. Richard Brecher & Eshan Choudhri, 1992. "Some Empirical Support for the Heckscher-Ohlin Model of Production," Carleton Economic Papers 92-08, Carleton University, Department of Economics.
  14. 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.
  15. Hakura, Dalia S., 2001. "Why does HOV fail?: The role of technological differences within the EC," Journal of International Economics, Elsevier, vol. 54(2), pages 361-382, August.
  16. Reimer, Jeffrey J., 2006. "Global production sharing and trade in the services of factors," Journal of International Economics, Elsevier, vol. 68(2), pages 384-408, March.
  17. Daniel M. Bernhofen & John C. Brown, 2005. "An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan," American Economic Review, American Economic Association, vol. 95(1), pages 208-225, March.
  18. Daniel M. Bernhofen, 2005. "The Empirics of Comparative Advantage: Overcoming the Tyranny of Nonrefutability," Review of International Economics, Wiley Blackwell, vol. 13(5), pages 1017-1023, November.
  19. Brecher, Richard A & Choudhri, Ehsan U, 1982. "The Leontief Paradox, Continued," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 820-823, August.
  20. Peter M. Morrow, 2008. "East is East and West is West: A Ricardian-Heckscher-Ohlin Model of Comparative Advantage," Working Papers 575, Research Seminar in International Economics, University of Michigan.
  21. Bowen, Harry P & Leamer, Edward E & Sveikauskas, Leo, 1987. "Multicountry, Multifactor Tests of the Factor Abundance Theory," American Economic Review, American Economic Association, vol. 77(5), pages 791-809, December.
  22. Arnaud Costinot & Dave Donaldson & Ivana Komunjer, 2010. "What Goods Do Countries Trade? A Quantitative Exploration of Ricardo's Ideas," NBER Working Papers 16262, National Bureau of Economic Research, Inc.
  23. Neary, J Peter & Schweinberger, Albert G, 1984. "Factor Content Functions and the Theory of International Trade," CEPR Discussion Papers 3, C.E.P.R. Discussion Papers.
  24. Bernhofen, Daniel M., 2009. "Multiple cones, factor price differences and the factor content of trade," Journal of International Economics, Elsevier, vol. 79(2), pages 266-271, November.
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