Abstract / Description of output
We generalise the traditional development-accounting framework to an open-
economy setting. In addition to factor endowments and productivity, relative factor costs emerge as a source of real-income variation across countries. These are determined by bilateral trade frictions (which underpin the patterns of “international value-added linkages”) and the global distribution of factor endowments and final expenditures. We use information on endowments, trade balances and value-added trade to back out the relative factor costs of 40 major economies in a theory-consistent manner. This reduces the variation in “residual” TFP required to explain the observed per-capita income differences by more than one half.
economy setting. In addition to factor endowments and productivity, relative factor costs emerge as a source of real-income variation across countries. These are determined by bilateral trade frictions (which underpin the patterns of “international value-added linkages”) and the global distribution of factor endowments and final expenditures. We use information on endowments, trade balances and value-added trade to back out the relative factor costs of 40 major economies in a theory-consistent manner. This reduces the variation in “residual” TFP required to explain the observed per-capita income differences by more than one half.
| Original language | English |
|---|---|
| Publication status | Published - 24 May 2018 |
| Event | PPP/ICP Conference 2018 Georgetown University - Georgetown University, Washington DC, United States Duration: 25 May 2018 → 26 May 2018 https://sites.google.com/site/alexisantoniades/ppp-icp-conference-2018-agenda |
Conference
| Conference | PPP/ICP Conference 2018 Georgetown University |
|---|---|
| Country/Territory | United States |
| City | Washington DC |
| Period | 25/05/18 → 26/05/18 |
| Internet address |