A Test of the Law of Comparative Advantage, Revisited

Yokohama National Univ. Working Paper No. 295

11 Pages Posted: 12 May 2010 Last revised: 14 Apr 2011

See all articles by Kozo Kiyota

Kozo Kiyota

Keio University - Keio Economic Observatory

Date Written: January 3, 2011

Abstract

This paper reconsiders one of the fundamental results in trade theory: the law of comparative advantage (Deardorff, 1980, 1994) from an empirical point of view. The contribution of this paper is to conduct a test of the law of comparative advantage that is consistent with both balanced and unbalanced trade, building upon Bernhofen and Brown (2004). To do so, this paper utilizes not only net exports valued at {\it autarky prices} but also those valued at {\it free trade prices}. The results support the empirical validity of the law of comparative advantage even after trade imbalances are taken into account.

Keywords: Law of Comparative Advantage, Trade Imbalance

JEL Classification: F1

Suggested Citation

Kiyota, Kozo, A Test of the Law of Comparative Advantage, Revisited (January 3, 2011). Yokohama National Univ. Working Paper No. 295. Available at SSRN: https://ssrn.com/abstract=1603809 or http://dx.doi.org/10.2139/ssrn.1603809

Kozo Kiyota (Contact Author)

Keio University - Keio Economic Observatory ( email )

Mita 2-15-45, Minato-ku
Tokyo, 108-8345
Japan

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