The interpretation of cross-section regression tests of the heckscher-ohlin theorem with many goods and factors

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Abstract

Numerous authors have used cross-section regression methods to explain interindustry variations in net exports by means of factor-use ratios as one of the tests of the Heckscher-Ohlin theorem. This paper shows, via an algebraic proof, that the regression procedures used by these authors may be inappropriate tests of the Heckscher-Ohlin theorem. Specifically, the paper shows that in a framework of many goods and factors, inferences about the relative abundance of a particular factor cannot be made by looking at the signs of the regression coefficients unless very stringent requirements are met.

Original languageEnglish (US)
Pages (from-to)163-167
Number of pages5
JournalJournal of International Economics
Volume14
Issue number1-2
DOIs
StatePublished - Feb 1983

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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