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Can Productivity Progress in China hurt the US ? Professor Samuelson's Example Extended

Author

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  • Wenli Cheng
  • Dingsheng Zhang

Abstract

This paper develops a general equilibrium 3-good Ricardian model that extends Professor Samuelson's example on the impact of productivity progress published in JEP (summer 2004). Our model highlights Professor Samuelson's insight that productivity progress can change the pattern of trade which in turn can have dramatic welfare implications. It also shows that while Professor Samuelson is correct that productivity growth in one country can hurt another, the loss is not as permanent as his example appears to suggest. Continuing productivity growth in one country is likely to benefit all trading countries in the long run.

Suggested Citation

  • Wenli Cheng & Dingsheng Zhang, 2005. "Can Productivity Progress in China hurt the US ? Professor Samuelson's Example Extended," Monash Economics Working Papers 12/05, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2005-12
    as

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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2005/1205progressinchina.pdf
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    References listed on IDEAS

    as
    1. Jagdish Bhagwati & Arvind Panagariya, 2004. "The Muddles over Outsourcing," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 93-114, Fall.
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    Cited by:

    1. Yew‐Kwang Ng & Guang‐Zhen Sun, 2007. "Economics Of Endogenous Specialization: Introduction," Pacific Economic Review, Wiley Blackwell, vol. 12(1), pages 63-67, February.

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    More about this item

    Keywords

    3-good Ricardian model; impact of productivity growth; globalisation;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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