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An appraisal of alternative Ricardian trade models

Author

Listed:
  • Ariel Dvoskin

    (Central Bank of Argentina)

  • Gabriel Brondino

    (Universita Cattolica del Sacro Cuore, Piacenza)

Abstract
A prevalent feature of the global economy is the relevance of trade in intermediates due to production fragmentation. This phenomenon has led to the revival and development of trade models that include inter-industry relations. A wide variety of Ricardian trade models cope with this feature. In this article, we develop a Sraffa-Leontief framework to compare and appraise these models. The models are distinguished by their underlying theory of distribution and the assumptions about the degree of international capital mobility. We compare the predicted effects on employment and the distribution of national income. Moreover, we assess if the model assures the existence of a complete trade pattern, i.e. if it can assure that all countries engage in trade (like the principle of comparative advantage predicts). It follows from our appraisal that it is not warranted that all countries can engage in international trade, even if they want to. In other words, if allowed to work, the "strong balancing forces" may not make a country internationally competitive when there is production fragmentation.

Suggested Citation

  • Ariel Dvoskin & Gabriel Brondino, 2022. "An appraisal of alternative Ricardian trade models," BCRA Working Paper Series 2022104, Central Bank of Argentina, Economic Research Department.
    • Handle: RePEc:bcr:wpaper:2022104
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Ricardian trade models; comparative advantages; desertification;
    All these keywords.

    JEL classification:

    • B27 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - International Trade and Finance
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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