International Trade and the Equilibrium Rate of Unemployment in a Heckscher-Ohlin World Economy |
| |
Authors: | Dr. Hian Teck Hoon |
| |
Affiliation: | National University of Singapore |
| |
Abstract: | This paper develops a (stylized Asia-America) Heckscher-Ohlin world economy in which the equilibrium rate of unemployment is endogenous. We examine the impact of various economic shocks on unemployment in the global economy. Harrod-neutral or Hicks-neutral technical progress across all industries in Asia leads to a terms of trade improvement for America but raises America's unemployment rate. Introducing a third country such as the block of former socialist economies results in higher unemployment for both Asia and America. Protection in America lowers American equilibrium unemployment but raises Asia's unemployment. [E24] |
| |
Keywords: | |
|