GEP Research Paper 07/02
On the Magic Behind David Ricardo's Four Mystical Numbers
Daniel M. Bernhofen
Abstract
Building on Ruffin's recent interpretation of Ricardo's four numbers as labour embodied in trade rather than domestic labour coefficients, I identify the magic behind these four mystical numbers. I show that the magic lies in Ricardo's underlying logic in predicting the pattern of international trade. Using a single graphical framework, I show that Ricardo's logic provides a device for a unified treatment of the commodity and the factor content predictions of international trade with an arbitrary number of goods, factors and countries.
Issued in January 2007.
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