Chapter 1 李嘉图模型.ppt

DFS模型 Assuming a large number of goods, ranking the goods from the one with the smallest relative labor requirement to the one with the largest from the home country perspective. All commodities are indexed by , where a2 is the labor requirement for a unit of output in foreign country and a1 is the labor requirement for a unit of output in home country for any particular good in the continuum. This is equivalent to ranking goods starting with those in which home country’s relative productivity is the greatest. The location of production for any good will depend on relative wages and the exchange rate. The home country will export those commodities where and import those products where Key point A country has comparative advantage in producing a good when the opportunity cost of producing the good is lower than the opportunity cost of producing the good in another country. The pattern of trade between countries is determined by comparative advantage. This means that even countries with poor technologies can export the goods in which they have comparative advantage. All countries experience gains from trade. That is, the utility of an importing or exporting country is at least as high as it would be in the absence of international trade. The level of wages in each country is determined by its absolute advantage, that is, by the amount the country can produce with its labor. This result explains why countries with poor technologies are still able to export: their low wages allow them to overcome their low productivity. The equilibrium price of a good on the world market is determined at the point where the export supply of one country equals the import demand of the other country. A country’s TOT equals the price of its export good divided by the price of its import good. A rise in a country’s TOT makes it better off because it is exporting at higher prices of importing at lower prices. Chapter 1-1 Preliminaries: Two-Sector Models Class