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Article
Can Comparative Advantage Explain the Growth of US Trade?
The Economic Journal (2007)
  • Alejandro Cuñat
  • Marco Maffezzoli
Abstract

We present a dynamic comparative advantage model in which moderate reductions in import tariffs can generate sizable increases in trade volumes over time. A fall in tariffs has two effects. First, for given factor endowments, it raises the degree of specialization, leading to a larger volume of trade in the short run. Second, it raises the factor price of each country's abundant factor, leading to diverging paths of relative factor endowments and a rising degree of specialization. A simulation exercise shows that a fall in tariffs produces a disproportional increase in the trade share of output as in the data.

Keywords
  • International Trade,
  • Heckscher-Ohlin,
  • Dynamic Macroeconomics
Disciplines
Publication Date
April, 2007
Citation Information
Alejandro Cuñat and Marco Maffezzoli. "Can Comparative Advantage Explain the Growth of US Trade?" The Economic Journal Vol. 117 Iss. 520 (2007)
Available at: http://works.bepress.com/marco_maffezzoli/9/