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The specific factors continuum model, with implications for globalization and income risk

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  • Anderson, James E.

Abstract

This paper embeds the specific factors model in the goods continuum approach of Dornbusch et al. (1977, 1980) and applies it to analyze the effect of globalization on income risk. Globalization amplifies sector specific income risk induced by idiosyncratic sectoral technology shocks, but tends to reduce income risk to both mobile and immobile factors induced by aggregate technology shocks that differ by country. Aggregate risk bears most heavily on the poorest specific factors.

Suggested Citation

  • Anderson, James E., 2011. "The specific factors continuum model, with implications for globalization and income risk," Journal of International Economics, Elsevier, vol. 85(2), pages 174-185.
    • Handle: RePEc:eee:inecon:v:85:y:2011:i:2:p:174-185
    DOI: 10.1016/j.jinteco.2011.08.003
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    More about this item

    Keywords

    Goods continuum; Extensive margin; Factoral terms of trade;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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