ps3 - ECON 450: INTERNATIONAL TRADE MARK MOORE FALL 2011...

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ECON 450: INTERNATIONAL TRADE MARK MOORE FALL 2011 PROBLEM SET 3 A. Do problems 1-4 at the end of chapter 4 in the Krugman-Obstfeld text. B. 19th Century Trade Policy I don't know much about the tariff. But I do know when I buy a coat from England, I have the coat and England has the money. But when I buy a coat in America, I have the coat and America has the money. Abraham Lincoln Lincoln's statement seems to imply that trade is bad. Let us examine Lincoln's claim in (pseudo-) historical context. Assume there are two countries—the United States and Great Britain—and two goods—a manufactured good (M), standing in for the coat, and an agricultural good, cotton (C). There are three factors: capital (K), which is specific to M; land (T), which is specific to C; and labor (L), which is mobile between the sectors. (Ignore the fact that cotton could be used in the production of coats.) The goods are each produced with a CRS technology, using two factors—K and L for the production of M, and T and L for
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This note was uploaded on 11/21/2011 for the course ECON 404 taught by Professor Carrillo during the Spring '11 term at USC.

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ps3 - ECON 450: INTERNATIONAL TRADE MARK MOORE FALL 2011...

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