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The Classical Ricardian Theory of Comparative Advantage Revisited

Posted: 9 Sep 1998  

Stephen S. Golub

Swarthmore College - Economics Department

Chang-Tai Hsieh

University of Chicago - Booth School of Business; University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

According to the classical Ricardian theory of comparative advantage, relative labor productivities determine trade patterns. The Ricardian model plays an important pedagogical role in international economics, but has received scant empirical attention since the 1960s. This paper assesses the contemporary relevance of the Ricardian model for U.S. trade. Cross-section seemingly unrelated regressions of sectoral trade flows on relative labor productivity and unit labor costs are run for a number of countries vis-a-vis the United States. The coefficients are almost always correctly signed and statistically significant, although much of the sectoral variation of trade remains unexplained.

JEL Classification: F11, F14

Suggested Citation

Golub, Stephen S. and Hsieh, Chang-Tai, The Classical Ricardian Theory of Comparative Advantage Revisited. Review of International Economics. Available at SSRN: https://ssrn.com/abstract=114747

Stephen S. Golub (Contact Author)

Swarthmore College - Economics Department ( email )

Swarthmore, PA 19081
United States
610-328-8103 (Phone)
Not Available (Fax)

Chang-Tai Hsieh

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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