Allowing all factors in each country to have different productivities, now run the program…

Allowing all factors in each country to have different productivities, now run the program “compute_pi.do” to compute factor productivities  as Trefler (1993). Note that there are 9 factors in the original data set, but these are now aggregated to just 4 factors, which are labor (endowment 1), capital (endowment 2), cropland (endowment 3) and pasture … Continue reading "Allowing all factors in each country to have different productivities, now run the program…"

In the sector-specific model, suppose that the home and foreign countries have identical labor…

In the sector-specific model, suppose that the home and foreign countries have identical labor and capital in sector 2, but the home country has more capital in sector 1. Technologies and tastes are the same across countries. (a) Can we predict the trade pattern between the countries? What factor(s) at home benefit from the opening … Continue reading "In the sector-specific model, suppose that the home and foreign countries have identical labor…"

Suppose that there are two outputs – non traded good 1 and traded good 2 – and three inputs –…

Suppose that there are two outputs – non traded good 1 and traded good 2 – and three inputs – labor, capital, and imported inputs. Assume that the cost share of labor is higher in good 1 and the cost share of capital is higher in good 2. The prices of both outputs are treated … Continue reading "Suppose that there are two outputs – non traded good 1 and traded good 2 – and three inputs –…"

In this question we will examine the aggregate demand curve for labor that arises in autarky, and…

In this question we will examine the aggregate demand curve for labor that arises in autarky, and under free trade. Make all the usual assumptions of the 2×2 economy. (a) First consider the autarky economy, where there is a single representative consumer in the country, and the prices for the goods are determined by supply … Continue reading "In this question we will examine the aggregate demand curve for labor that arises in autarky, and…"

Consider an economy with two industries and three factors – unskilled labor (L), skilled labor…

Consider an economy with two industries and three factors – unskilled labor (L), skilled labor (H) and capital (K). (a) Suppose that industry one has a higher cost share of unskilled labor and also of capital (think of factory production). Suppose further than the product prices are constant, but that the rental on capital goes … Continue reading "Consider an economy with two industries and three factors – unskilled labor (L), skilled labor…"

Store the files for this chapter in the directory: c:Empirical_ExerciseChapter_4. Run the…

Store the files for this chapter in the directory: c:Empirical_ExerciseChapter_4. Run the program “Problem_4_2.do” to reproduce the regressions in Table 4.4 (which is simplified from Table III in Feenstra and Hanson, 1999). Then answer: what weights are used in these regressions, and how are the results affected if these weights are not used? Problem_4_2 Consider … Continue reading "Store the files for this chapter in the directory: c:Empirical_ExerciseChapter_4. Run the…"