Endogenous Comparative Advantage, Government, and the Pattern of Trade / Richard H. Clarida, Ronald Findlay.

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Clarida, Richard H

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w3813.Publication details: Cambridge, Mass. National Bureau of Economic Research 1991.Description: 1 online resource: illustrations (black and white)Subject(s):

F11 - Neoclassical Models of Trade

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Abstract: This paper explores the relationship between government policy and comparative advantage in a neoclassical model of international trade. A specification of the Ricardo-Viner model with public goods and public inputs is presented that is used to study the role that government policy can play in the determination and promotion of comparative advantage and in the maximization of the gains that may be obtained from international trade. The model is also used to study the influence that international trade can exert on the scale and scope of government activity. The paper endeavors to reconcile a positive theory of trade and government with the apparent shift in measured productivity that often follows an opening to trade. The paper concludes by interpreting the model in the context of recent policy discussions of such issues as structural impediments, competitiveness, and the role of trade policy.

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Previous	nber w3810 Short and Long Run Externalities /	nber w3811 The Real Exchange Rate, Exports, and Manufacturing Profits: A Theoreti- cal Framework With Some Empirical Support /	nber w3812 Co-Integration, Aggregate Consumption, and the Demand For Imports: A Structural Econometric Investigation /	nber w3813 Endogenous Comparative Advantage, Government, and the Pattern of Trade /	nber w3814 Entry, Dumping, and Shakeout /	nber w3815 Productivity in the Transportation Sector /	nber w3816 Stabilization and Liberalization Policies in Central and Eastern Europe: Lessons From Latin America /	Next

August 1991.

This paper explores the relationship between government policy and comparative advantage in a neoclassical model of international trade. A specification of the Ricardo-Viner model with public goods and public inputs is presented that is used to study the role that government policy can play in the determination and promotion of comparative advantage and in the maximization of the gains that may be obtained from international trade. The model is also used to study the influence that international trade can exert on the scale and scope of government activity. The paper endeavors to reconcile a positive theory of trade and government with the apparent shift in measured productivity that often follows an opening to trade. The paper concludes by interpreting the model in the context of recent policy discussions of such issues as structural impediments, competitiveness, and the role of trade policy.