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or some of the Academic Articles I have written:
Summary of the Ricardian model and how it explains productivity.
There have been several theories. For example, the Ricardian model, which explains productivity differences in terms of the absolute advantage.
However the empirical literature has ignored the previous model because of some deffects that it has. Because it implies that countries specialize completely in tradeable-goods production.
Another problem in getting the relative unit labor cost is the calculation of comparable aggregate and sectoral productivity measures. Because theorically the productivity ought to be measured in physical units, however the data is in value of terms.
Another topic that has been debated is how to measure the real output. The way in which it is calculated is constant-price value added. However this has been criticized by Jorgenson and Basu and Fernald as well. Because they say that using the value added makes the connection between productivity and international competitiveness stronger.
Basu and Fernald main object is the value added deflation. He emphasizes that the value-added deflators change productivity growth in scale economies.
Parity conversion has to take into account the conversion among different countries' currencies. And that's why a PPPR is needed. The issue mentioned is that it is hard to decide which PPPR to use because in the sectoral productivity analysis and comparison it is needed to know the dissaggregation that is desireable.
One example of how PPPRs reflect quality differences more than price differences is for example the price of electronic devices in Mexico and the USA.
In the text the expenditure PPPRs that are EPPPRs, are efficient for disaggregated components on gross domestic product produced.
The great thing is that EPPPRs are available for a vast variety of countries.
Another serious issue mencioned is Labor compensation, productivity and unit labor cost. Here it is necessary to mencion the interest of various companies to get labor from countries with low-tax regulations and cheap labor cost. However low wages and low taxes do not always guarantee savings for the companies. And that's because of labor productivity that is affected for the low wages.
Labor productivity in the US has surpassed Korean, Mexican, Thai, Malaysian but not the Japanese.
In the article it is mentioned that for the bilateral trades 2 measures of trade flows; bilateral trades and export ratios.
In bilateral trade balances the countries with the best terms of goodness of fit are Japan, Mexico and Germany.
The article also points out that the country that best comes to explain the Ricardian theory is Japan. Contradicting what it is believed about thzee Japanese market, because it does not necessarily go against normal market mechanisms.
The investigations will focus on other areas such as how technology will explain terms like the comparative advantage.
