Revisiting the Fallacy of Free Trade
REVIEW OF INTERNATIONAL ECONOMICS
Posted: 7 May 1998
Abstract
We examine results presented by Batra (1992) in an article, published in this Journal, entitled "The Fallacy of Free Trade." Batra contends that technical change in Japanese manufacturing necessarily reduces US real wages in the confines of a two good, two country Ricardo-Viner model. We construct a parsimonious empirical Ricardo-Viner model to analyze the same issue. We find that the impact on US real wages is very small. Systematic sensitivity analysis shows that increases in the real wage are as likely as decreases. We conclude that Batra's assertions are empirically unlikely.
JEL Classification: F11
Suggested Citation: Suggested Citation
Arndt, Channing and Hertel, Thomas W., Revisiting the Fallacy of Free Trade. REVIEW OF INTERNATIONAL ECONOMICS, Available at SSRN: https://ssrn.com/abstract=4067
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