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7 Cards in this Set
- Front
- Back
- 3rd side (hint)
Heckscher-Ohlin Model Assumptions
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-technologies same across countries
-countries trade b/c available resources(Land, Labor, Capital) differ across countries -two goods, two factors, two countries |
three points
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Is Heckscher-Ohlin Model Long-Run or Short-Run?
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-Long-Run b/c labor, capital can move freely between industries
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What good should country (export/import) according to Hecksher-Ohlin model?
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-Export good that uses its abundant factor intensively
-Import other good |
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How did Leontief (1953) contradict Heckscher-Ohlin model?
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-Found that US exports were less capital intensive, more labor intensive than US imports
-Paradoxical: US abundant(intensive) in capital |
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According to the Stolper-Samuelson theorem, what happens when the relative price of a good goes up?
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-real earnings of labor and capital move in opposite directions:
+factor used intensively in industry has earnings go up +factor used less has earnings go down |
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What is determined when Heckscher-Ohlin and Stolper-Samuelson theorems are put together?
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-country's abundant factor gains from opening trade
-country's scarce factor loses from opening of trade =b/c relative price of export goes up |
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What is the Effective Labor Force?
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Labor Force x Its productivity
LF x Productivity=output labor force can produce |
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