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dc.contributor.authorBernhofen, Daniel M.en_US
dc.contributor.authorBrown, John C.en_US
dc.description.abstractWe propose a normative assessment of the value of international trade that is rooted in production theory and embeds Ricardo's 1817 formulation of the gains from trade into a multi-factor general equilibrium framework. Without imposing strong assumptions on consumer rationality or data from the economy's autarky equilibrium, our formulation reveals information about both the magnitude and the sources of the gains from trade. A high quality data set on product and task-specific factor employments in 19th-century Japan permits us to apply this approach to answer the following counterfactual: What factor augmentation would have been necessary to compensate the economy for an overnight suspension of trade in its early trade years of 1865-1876? Over the entire period, we find that trade was revealed to be equivalent to a 5.5% increase in Japan's female labour force, a 3.3% increase in its male labour force and a 3.9% increase in its arable land. Efficiency losses associated with a counterfactual suspension of trade averaged between 6.3 and 7.7 percent of the economy's productive capacity.en_US
dc.publisherCenter for Economic Studies and Ifo Institute (CESifo) Munichen_US
dc.relation.ispartofseriesCESifo Working Paper: Trade Policy 3860en_US
dc.subject.keywordgains from tradeen_US
dc.subject.keywordfactor augmentation equivalent to tradeen_US
dc.subject.keywordnatural experiment of Japanen_US
dc.titleA factor augmentation formulation of the value of international tradeen_US
dc.typeWorking Paperen_US
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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