Essay
The Heckscher-Ohlin model is famous for being elegant and mathematically sophisticated, yet failing to describe reality. One manifestation of this fact is Trefler's Case of Missing Trade. Explain what exactly is missing. In what sense is it missing?
How would you explain why it is missing?
How can a relaxation of the identical production functions explain the case of the missing trade?
How did the results obtained by Davis and Weinstein strengthen support for the validity of the HO model?
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Trefler demonstrated that the actual vol...View Answer
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