FACTOR PROPORTIONS AND RELATIVE PRICE UNDER C.E.S. PRODUCTION FUNCTIONS: AN EMPIRICAL STUDY OF JAPANESE-U.S. COMPARATIVE ADVANTAGE.
STANFORD UNIV CALIF INST FOR MATHEMATICAL STUDIES IN THE SOCIAL SCIENCES
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The study is an empirical testing of the relative-factor-proportions theory of comparative advantage Heckscher-Ohlin theorem, and of the major implications for international relative-price determination of constant-elasticity-of-substitution CES production functions. It utilizes detailed Japanese and U.S. 1951 market-price data and input-output materials for two-country comparison of factor-input patterns and relative commodity prices. Principal method employed is linear regression of composite weighted-average Japanese-U.S. price ratios on total direct and indirect capital-labor proportions, organized by 29-sector industry classification, and variously measured. Extensive detailed factor-use data are presented, as well as the Leontief-inverse of domestic-product technological flow matrix for each economy. An equivalent-efficiency relative price or relative joint factor-cost index concept and data are developed, depending solely on the shape of each industrys CES production function and relative total factor proportions. Other data include relative prices and costs of raw-material inputs into manufacturing, direct and total input coefficients for imports used in industry, factor and commodity shadow-price estimates from linear regression of output levels on weighted factor-input volumes, and actual 1951 Japanese-U.S. trade flows. Author
- Economics and Cost Analysis