Review_Midterm2 AK

Leontief used us input output table to construct the

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Unformatted text preview: at least three reasons why Leontief may have arrived at these “paradoxical” results. ANSWER: Using data from 1947, Leontief found that U.S. imports were more labor intense than U.S. exports, which is counter to the prediction of the H- O model, under the assumption that the U.S. is capital abundant. Possible explanations are: . 1. Trade was not balanced in 1947 as H- O assumes. . 2. Technologies may not have been identical as H- O and Leontief assumed. (Leontief used US input output table to construct the capital intensity of US imports which assumes identical technologies.) Econ 370 Fall 2013 International Trade Professor Soderbery . 3. Leontief ignored all other factors of production besides labor and capital, which ignores the land abundance of the US. . 4. Leontief should have distinguished between skilled and unskilled labor, the US may have been abundant in skilled labor. Heckscher- Ohlin Questions: 1. For this question regarding the Heckscher- Ohlin model assume the following: there are two countries, Home and Foreign, abundant in capital and labor respectively. There are two goods (airplanes and...
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This note was uploaded on 02/10/2014 for the course ECON 370 taught by Professor Staff during the Fall '08 term at Purdue.

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