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Short run and long run in trade models: A note

Author

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  • Mauro Rodrigues

    (University of Sao Paulo, Brazil)

Abstract

This paper aims to capture key features of the Ricardo–Viner (RV) and Heckscher–Ohlin (HO) theories in a single dynamic general equilibrium framework. We use a simple 2-sector 2-factor model with adjustment costs associated with the movement of capital across sectors. We analyze the economy's response to exogenous changes in factor endowments and output prices. Our model reproduces the predictions of the RV theory in the short run (moment immediately after a parameter change) and the predictions of the HO model in the long run (steady state implied by a new set of parameters). Numerical examples of transition paths are also provided.

Suggested Citation

  • Mauro Rodrigues, 2013. "Short run and long run in trade models: A note," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 14(2), pages 2-10.
    • Handle: RePEc:anp:econom:v:14:y:2013:i:2:2_10
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    More about this item

    Keywords

    Trade; Factor mobility; Dynamics;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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