tr31

Information about tr31

Published on January 11, 2008

Author: Teobaldo

Source: authorstream.com

Content

The Ricardian Model with a Continuum of Goods:  The Ricardian Model with a Continuum of Goods a(z)=unit labor requirement at home a*(z)=unit labor requirement abroad A(z)=a*(z)/a(z) ratio of Home to Foreign productivity of labor in good z. A(1)>A(2)>A(3)>... A(z) relative wages w/w* z Slide2:  Which goods will be produced at home? Z is produced at Home if wa(z)<w*a*(z) or w/w*<a*(z)/a(z)=A(z) Demand Side = fraction of income spent on Home-made goods domestic income world income Slide3:  relative wage w/w* A(z) z Slide4:  GAINS FROM TRADE relative wage w/w* A(z) z I. Autarky Country H II. Free Trade Slide5:  Country H’s Exports Country H’s Imports Country F’s Exports Slide6:  Country F’s Imports Slide7:  z 1 2 An increase in Foreign Productivity Home is better off because: (1) consistent Home exports p(z)=wa(z) p’(z)=w’a(z) (2) consistent Home imports p(z)=w*a*(z) p’(z)=w*’a*’(z) Slide8:  w/w* falls proportionally less than a*(z) Transitional goods p(z)=wa(z) p’(z)<w’a(z)

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