IDEAS home Printed from https://ideas.repec.org/p/arx/papers/1711.10096.html
   My bibliography  Save this paper

The effects of energy and commodity prices on commodity output in a three-factor, two-good general equilibrium trade model

Author

Listed:
  • Yoshiaki Nakada

Abstract

We analyze the effects of energy and commodity prices on commodity output using a three-factor, two-good general equilibrium trade model with three factors: capital, labor, and imported energy. We derive a sufficient condition for each sign pattern of each relationship to hold, which no other studies have derived. We assume factor-intensity ranking is constant and use the EWS (economy-wide substitution)-ratio vector and the Hadamard product in the analysis. The results reveal that the position of the EWS-ratio vector determines the relationships. Specifically, the strengthening (resp. reduction) of import restrictions can increase (resp. decrease) the commodity output of exportables, if capital and labor, domestic factors, are economy-wide complements. This seems paradoxical.

Suggested Citation

  • Yoshiaki Nakada, 2017. "The effects of energy and commodity prices on commodity output in a three-factor, two-good general equilibrium trade model," Papers 1711.10096, arXiv.org, revised Nov 2018.
    • Handle: RePEc:arx:papers:1711.10096
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/1711.10096
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thompson, Henry, 2014. "Energy tariffs in a small open economy," Energy Economics, Elsevier, vol. 44(C), pages 63-67.
    2. Ruffin, Roy J., 1981. "Trade and factor movements with three factors and two goods," Economics Letters, Elsevier, vol. 7(2), pages 177-182.
    3. Jota Ishikawa & Kazuharu Kiyono & Morihiro Yomogida, 2012. "Is Emission Trading Beneficial?," The Japanese Economic Review, Japanese Economic Association, vol. 63(2), pages 185-203, June.
    4. repec:ebl:ecbull:v:17:y:2005:i:3:p:1-10 is not listed on IDEAS
    5. Dei, Fumio, 1985. "Welfare gains from capital inflows under import quotas," Economics Letters, Elsevier, vol. 18(2-3), pages 237-240.
    6. Fullerton Don & Heutel Garth, 2011. "Analytical General Equilibrium Effects of Energy Policy on Output and Factor Prices," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(2), pages 1-26, January.
    7. Jones, Ronald W. & Easton, Stephen T., 1983. "Factor intensities and factor substitution in general equilibrium," Journal of International Economics, Elsevier, vol. 15(1-2), pages 65-99, August.
    8. Ethier, Wilfred J. & Svensson, Lars E. O., 1986. "The theoremes of international trade with factor mobility," Journal of International Economics, Elsevier, vol. 20(1-2), pages 21-42, February.
    9. Ferguson, D. G., 1978. "International capital mobility and comparative advantage : The two-country, two-factor case," Journal of International Economics, Elsevier, vol. 8(3), pages 373-396, August.
    10. Svensson, Lars E.O., 1984. "Factor trade and goods trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 365-378, May.
    11. Bandyopadhyay, Taradas & Bandyopadhyay, Bharati, 1989. "Economics of the import of factors of production : Comparative advantage and commercial policy," European Journal of Political Economy, Elsevier, vol. 5(4), pages 487-500.
    12. Shiro Takeda, 2005. "The effect of differentiated emission taxes: does an emission tax favor industry?," Economics Bulletin, AccessEcon, vol. 17(3), pages 1-10.
    13. Ronald W. Jones, 1967. "International Capital Movements and the Theory of Tariffs and Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 81(1), pages 1-38.
    14. Batra, Raveendra N. & Casas, Francisco R., 1976. "A synthesis of the Heckscher-Ohlin and the neoclassical models of international trade," Journal of International Economics, Elsevier, vol. 6(1), pages 21-38, February.
    15. Yoshiaki Nakada, 2017. "Factor endowment -- commodity output relationships in a three-factor, two-good general equilibrium trade model," Papers 1711.11429, arXiv.org.
    16. Srinivasan, T. N., 1983. "International factor movements, commodity trade and commercial policy in a specific factor model," Journal of International Economics, Elsevier, vol. 14(3-4), pages 289-312, May.
    17. Brecher, Richard A. & Findlay, Ronald, 1983. "Tariffs, foreign capital and national welfare with sector-specific factors," Journal of International Economics, Elsevier, vol. 14(3-4), pages 277-288, May.
    18. Henry Thompson, 1994. "Do oil tariffs lower wages?," Open Economies Review, Springer, vol. 5(2), pages 191-202, March.
    19. Sato, Ryuzo & Koizumi, Tetsunori, 1973. "On the Elasticities of Substitution and Complementarity," Oxford Economic Papers, Oxford University Press, vol. 25(1), pages 44-56, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yoshiaki Nakada, 2017. "Factor endowment -- commodity output relationships in a three-factor, two-good general equilibrium trade model," Papers 1711.11429, arXiv.org.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yoshiaki Nakada, 2018. "Deriving the factor endowment--commodity output relationship for Thailand (1920-1927) using a three-factor two-good general equilibrium trade model," Papers 1810.04819, arXiv.org.
    2. Thompson, Henry, 2014. "Energy tariffs in a small open economy," Energy Economics, Elsevier, vol. 44(C), pages 63-67.
    3. Nakada, Yoshiaki, 2015. "Economy-wide substitution and Rybczynski sign pattern in a three-factor two-good model," MPRA Paper 67863, University Library of Munich, Germany.
    4. Yoshiaki Nakada, 2018. "Factor endowment--commodity output relationships in a three-factor two-good general equilibrium trade model: Further analysis," Papers 1805.06129, arXiv.org, revised Oct 2018.
    5. Michael J. Hiscox, 2004. "International Capital Mobility And Trade Politics: Capital Flows, Political Coalitions, And Lobbying," Economics and Politics, Wiley Blackwell, vol. 16(3), pages 253-285, November.
    6. Nakada, Yoshiaki, 2015. "Deriving the factor endowment-commodity output relationship for Thailand (1920-1929) using a three-factor two-good model," MPRA Paper 69654, University Library of Munich, Germany.
    7. Nakada, Yoshiaki, 2015. "Economy-wide substitution and Rybczynski sign pattern in a three-factor two-good model: Further analysis," MPRA Paper 67864, University Library of Munich, Germany.
    8. Yoshiaki Nakada, 2017. "Factor endowment -- commodity output relationships in a three-factor, two-good general equilibrium trade model," Papers 1711.11429, arXiv.org.
    9. Henry Thompson, 2013. "Energy Tariffs, Production, and Income in a Small Open Economy," Auburn Economics Working Paper Series auwp2013-11, Department of Economics, Auburn University.
    10. Hikari Ban, 2010. "Factor Substitution and Relative Factor Prices," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 562-573, August.
    11. Harry P. Bowen & Jennifer Pédussel Wu, 2013. "Immigrant Specificity and the Relationship between Trade and Immigration: Theory and Evidence," Southern Economic Journal, John Wiley & Sons, vol. 80(2), pages 366-384, October.
    12. Sanoussi Bilal & Jean-Marie Grether & Jaime de Melo, 2015. "Attitudes Towards Immigration: A Trade Theoretic Approach," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 18, pages 439-453, World Scientific Publishing Co. Pte. Ltd..
    13. Henry Thompson, 2013. "A Factor Tariff, Domestic Supply, and Income," Auburn Economics Working Paper Series auwp2013-12, Department of Economics, Auburn University.
    14. Nakada, Yoshiaki, 2015. "Factor intensities and factor substitution in general equilibrium: A Comment," MPRA Paper 66758, University Library of Munich, Germany.
    15. Henry Thompson, 1994. "Do oil tariffs lower wages?," Open Economies Review, Springer, vol. 5(2), pages 191-202, March.
    16. Springer, Katrin, 2000. "Do We Have to Consider International Capital Mobility in Trade Models?," Kiel Working Papers 964, Kiel Institute for the World Economy (IfW Kiel).
    17. Henry Thompson, 1995. "Free trade and income redistribution in some developing and newly industrialized countries," Open Economies Review, Springer, vol. 6(3), pages 265-280, July.
    18. Linda S. Goldberg & Michael W. Klein, 1999. "International Trade and Factor Mobility: An Empirical Investigation," NBER Working Papers 7196, National Bureau of Economic Research, Inc.
    19. Kim, Hyeongwoo & Thompson, Henry, 2014. "Wages in a factor proportions model with energy input," Economic Modelling, Elsevier, vol. 36(C), pages 495-501.
    20. Jonathan Eaton, 1987. "A Dynamic Specific-Factors Model of International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(2), pages 325-338.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:1711.10096. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.