Paths of Development in the Three-Factor, n-Good General Equilibrium Model

Abstract

The three-factor, n-good model is displayed graphically and tested empirically. The three-dimensional endowment vectors and expansion paths are represented by points in an endowment triangle. Features of this endowment triangle determine relative factor returns, Rybczy nski and Stolper-Samuelson derivatives, output mixes, and the directi on of trade. The effects of mobile factors and nontraded goods are al so considered. Capital accumulation is shown to induce changes in out puts, trade, and the returns to factors that depend on the abundance of land relative to labor. Weak evidence for this 3 A n model is foun d in a 1978 U.N. data set on the value of output. Copyright 1987 by University of Chicago Press.