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19 Cards in this Set
- Front
- Back
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Stolper-Samuelson Theorem
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% increase in Pc/Pw will be a lot less than % increase in W/r
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Factor Price Equalization Theorem
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When relative commodity prices converge, so do factor prices
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Rybczinski Theorem
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If labor increases more than capital, the production of the labor-intensive good will increase more than proportionately
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Ricardian Model
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international trade is soley due to international differences in the productivity of labor
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terms of trade
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price of country's exports/price of country's imports
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Hecksher-Ohlin theorem
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A labor abundant country exports labor intensive goods
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comparative advantage in Ricardian
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(for home)
Wi/W*i< a*Li/aLI |
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Gravity Model
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Tij =A x Yi x Yj/Dij
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Wages will be higher in sector
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Pc/Pw > alc/alw
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Cheaper to produce in home if...
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Wali<w*ali
or a*li/ali>w/w* |
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Pauper Labor Argument
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unfair when low wages in foreign
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Value of economy's production
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V = Pc x Qc + Pw x Qw
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Budget Constraint
Imports = Exports |
Df - Qf = (Pc/Pf) x (Qc-Dc)
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Leontief paradox
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US exports less capital intensive than US imports
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Standard Trade Model four key relationships
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1. Between PPF and relative supply curve
2. Between relative price and relative demand 3. determination of world equilibrium by world relative supply and world relative demand 4. effect of terms of trade on nations welfare |
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isovalue lines
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lines along with output value is constant
slope is minus relative price of cloth |
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immiserizing growth
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argued that export-biased growth by poor nations would worsen their terms of trade so much that they would be worse off than if they had not grown at all
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marginal propensity to spend
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allocates a higher proportion of a marginal shift in expenditure to a good
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Metzler paradox
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possibility that tariffs and export subsidies might have perverse effects on internal prices in a country
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