publication . Research . 2009

Revisiting Ricardo: Can productivity differences explain the pattern of trade between EU countries?

Beine, Michel;
Open Access English
  • Published: 01 Jan 2009
  • Publisher: Leuven: Katholieke Universiteit Leuven, LICOS Centre for Institutions and Economic Performance
Abstract
In this paper we revise the empirical tests of the Ricardian model by testing properly the Ricardian hypotheses on bilateral trade flows. Our tests are based on NACE 2-digit industry aggregation of productivity and of bilateral trade flows between 21 EU member states for the period 1994-2004. We compare the matchings between relative bilateral sectoral productivity rankings and bilateral sectoral exports-to-imports ratio rankings for each of 21 x 20 country pairs. We find that the Ricardian hypothesis is surprisingly good at predicting the static pattern of bilateral trade between individual EU member states even after controlling for the Heckscher-Ohlin type of...
Subjects
free text keywords: D24, F14, international trade, productivity, Ricardian hypothesis, empirical tests, Außenhandelsstruktur, Komparativer Kostenvorteil, Produktivität, EU-Staaten, ddc:330
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