- Auburn, Alabama, United States
Henry Thompson
Auburn University, Economics, Faculty Member
... What, then, is the real-world counterpart to terms-of-trade moti-vations? We pause in chapter 2 to consider this question, and provide 4. Of course, the retaliation threat is effective only if the trading partner has the ability to... more
... What, then, is the real-world counterpart to terms-of-trade moti-vations? We pause in chapter 2 to consider this question, and provide 4. Of course, the retaliation threat is effective only if the trading partner has the ability to punish the domestic government. ...
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This paper examines elasticity of substitution among electricity, labor and capital in U.S. manufacturing industry, using cross section data of 2007. In this analysis, Manufacturing industries were categorized into three categories based... more
This paper examines elasticity of substitution among electricity, labor and capital in U.S. manufacturing industry, using cross section data of 2007. In this analysis, Manufacturing industries were categorized into three categories based on input use and technology. Translog homothetic and non-homothetic production functions for each category were estimated but the restrictions imposed for homothetic production were rejected. The estimated parameters of non homothetic production function were used to estimate the own, cross price and Morishma elasticities of inputs for three different manufacturing categories. These elasticities indicate that capital, electricity and labor are substitutes each other. Cross price elasticities indicate that that electricity is weak substitute to capital and labor but capital and labor are strong substitutes to electricity. These elasticities and the availability of nonrenewable energy source suggest that price of electricity or energy will rise faster...
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The gap in total factor productivity (TFP) growth in sawmill and wood preservation industry widened between the US and Canada over the period 1958 to 2003. Stages of the softwood lumber dispute had different effects on TFP growth. The... more
The gap in total factor productivity (TFP) growth in sawmill and wood preservation industry widened between the US and Canada over the period 1958 to 2003. Stages of the softwood lumber dispute had different effects on TFP growth. The strong housing market in the US increases imports of Canadian softwood, while the exchange rate and other variables have no effect. Trade restrictions since 1992 have been unable to stem imports due to strong US demand.
Research Interests: Productivity and Softwood
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A nonrenewable energy resource added to capital and labor in the neoclassical growth model introduces its depletion dynamics and expands the role of substitution. Optimal depletion implies a rising energy price but extraction may increase... more
A nonrenewable energy resource added to capital and labor in the neoclassical growth model introduces its depletion dynamics and expands the role of substitution. Optimal depletion implies a rising energy price but extraction may increase intermittently due to investment or labor growth according to the pattern of substitution between the three inputs. Conditions to maintain intergenerational equity are examined. The paper also analyzes the tragedy of the commons and a myopic monopolist in this three factor growth model.
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The exchange rate and switch to the euro may be thought to have lowered tourism revenue in Greece. These effects are examined with data from 1974 to 2006 in an error correction model of optimal tourist spending that includes source... more
The exchange rate and switch to the euro may be thought to have lowered tourism revenue in Greece. These effects are examined with data from 1974 to 2006 in an error correction model of optimal tourist spending that includes source country income and air travel costs. The results may be relevant for touristic countries considering competitive devaluation or a monetary union.
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The effects of exchange rates and risk on major commodity exporters are examined in markets constructed from the top five importers and top three exporters from 1961 to 2000. Depreciation typically stimulates exports but the impacts vary... more
The effects of exchange rates and risk on major commodity exporters are examined in markets constructed from the top five importers and top three exporters from 1961 to 2000. Depreciation typically stimulates exports but the impacts vary considerably. Exchange risk has virtually no negative impacts. Importer incomes raise exports for about half the exporters, and major competitor market shares affect about half the exporters.
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Fixed effect time series effect models are used to analyze the spatial and time series pattern of the effects of subsidies on manufacturing income across twenty counties in Alabama from 1970 to 1999. The results from the fixed effect... more
Fixed effect time series effect models are used to analyze the spatial and time series pattern of the effects of subsidies on manufacturing income across twenty counties in Alabama from 1970 to 1999. The results from the fixed effect model indicate that median populated counties performed better than larger and smaller counties while the time series effect model indicates that the impact of subsidies is marginal across the state over time.
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Fertilizer consumption per cubic meter of freshwater is taken as a proxy for global water quality indicator. A global model of environmental quality for 121 countries confirms the Kuznet's hypothesis. Global turning point is reached... more
Fertilizer consumption per cubic meter of freshwater is taken as a proxy for global water quality indicator. A global model of environmental quality for 121 countries confirms the Kuznet's hypothesis. Global turning point is reached at nearly five times the average income of all countries. Foreign Direct Investment (FDI) was significant to increase the national income. Increased aid and larger farm size per capita favored higher environmental quality, albeit insignificant. A flow of better technology and possible non-agricultural employment might help improve water quality in developing countries when their net income increases.
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This note looks at the time series evidence of the effect of NAFTA on Alabama tomato production using data up to the start of NAFTA to predict the trend in its absence. The time series is stationary with a constant mean and variance. An... more
This note looks at the time series evidence of the effect of NAFTA on Alabama tomato production using data up to the start of NAFTA to predict the trend in its absence. The time series is stationary with a constant mean and variance. An autoregressive model with one lag makes the forecast verified by impact analysis. The average yearly production loss over the 8 NAFTA years is estimated to be 85 thousand cwt, worth over $2 million at the average price implying total lost revenue of over $17 million. There is also evidence that imports and peso depreciation lower Alabama production.
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Issues on energy have recently dominated the economic decisions of several states across the U.S. economy and states in the southeastern region of U.S. are no exception. Almost all the states in the southeast import virtually all of their... more
Issues on energy have recently dominated the economic decisions of several states across the U.S. economy and states in the southeastern region of U.S. are no exception. Almost all the states in the southeast import virtually all of their fuel resources from the Gulf Coast representing an annual financial diversion of several billions of dollars some of which could be used to develop domestic, alternative energy resources. The focus of this study was to determine the potential substitution between renewable energy and conventional energy forms in the southeast of U.S. We developed a system of factor share equations using translog cost function. The system of equations was estimated using a pooled iterative Non-linear Seemingly Unrelated Regression (SUR) procedure with homogeneity and symmetry restrictions imposed. Findings indicate that factor demands in the southeast energy sector are price inelastic and there is limited substitution potential when energy prices rise in fuel produc...
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The specific factors model was used to determine potential adjustments due to FTAA on income redistribution among skilled labor groups in North Carolina. All wages but agriculture and manufacture labor are projected to rise. Returns to... more
The specific factors model was used to determine potential adjustments due to FTAA on income redistribution among skilled labor groups in North Carolina. All wages but agriculture and manufacture labor are projected to rise. Returns to capital in service will increase while returns to capital in agriculture and manufacture fall.
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This article examines a tariff on an imported factor of production in a small, open economy with two domestic factors. Suppose the imported factor is intensive in export production, and labor in import competing production. The factor... more
This article examines a tariff on an imported factor of production in a small, open economy with two domestic factors. Suppose the imported factor is intensive in export production, and labor in import competing production. The factor tariff would reduce export production and trade, but raise the wage. The flexibility afforded by the three factors raises the possibility that import spending might fall more than the decrease in output. That is, the factor tariff could raise income. Inelastic demand for the imported factor and a high labor share of income favor increased income.
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This paper examines empirical links between relative prices and bilateral trade based on constant cost trade theory. The global models are built from the World Input-Output Database WIOD aggregated to three, four, and five regions and... more
This paper examines empirical links between relative prices and bilateral trade based on constant cost trade theory. The global models are built from the World Input-Output Database WIOD aggregated to three, four, and five regions and goods. The simple model assumes relative labor shares are relative prices and average relative price is the terms of trade. Trade patterns are complex among partially specialized regions. Model predictions are compared to observed net exports in seven different aggregations. Regression analysis also examines the effects of relative prices on the total bilateral net exports across models.
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This paper estimates trends in factor price elasticities adding energy Btu input to fixed capital assets and the labor force in annual US data from 1949 to 2013. Second order effects improve estimates of the production function in log... more
This paper estimates trends in factor price elasticities adding energy Btu input to fixed capital assets and the labor force in annual US data from 1949 to 2013. Second order effects improve estimates of the production function in log differences. The unrestricted estimates test for concavity and constant returns to scale. Adding energy input reduces the apparent productivity of labor and reveals strong capital-labor factor price elasticities with pronounced trends. Energy and labor trend to become weak complements. These trends offer insight into recent economic history and keys to predicting the future as well.
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Rising foreign income increases tourism demand and wages if tourism is labour-intensive relative to capital. This paper adds a third factor of production, skilled labour or natural resources, to delve more deeply into the potential income... more
Rising foreign income increases tourism demand and wages if tourism is labour-intensive relative to capital. This paper adds a third factor of production, skilled labour or natural resources, to delve more deeply into the potential income redistribution in general equilibrium due to rising foreign income. In a small open economy producing tourism and an import competing good, the wage may fall in spite of the expanding tourism sector if capital is a technical complement with the third factor. A model including a traditional export is also examined, as is a specific factors version of the model. The possibility of a falling wage with expanding labour-intensive tourism relates to a number of policy issues in touristic countries.
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This text integrates the microeconomics of trade with concepts from open economy macroeconomics. The emphasis is on the powerful forces of international competition and the limitations of government policy. Economics began with a... more
This text integrates the microeconomics of trade with concepts from open economy macroeconomics. The emphasis is on the powerful forces of international competition and the limitations of government policy. Economics began with a political debate over tariffs and the politics continue. Domestic industries lobby for protection against foreign competitors and for export subsidies. Government policy makers favor their pet industries in return for lobby money and votes. Meanwhile, other industries lobby for free trade. Governments worldwide tentatively negotiate free trade agreements while international financial markets determine the effectiveness of their fiscal and monetary policies. Wages, capital returns, and national income rise and fall with international commerce. The text covers these issues of international trade and finance. The trade theory is based on partial equilibrium market analysis, constant cost and neoclassical general equilibrium, the factor proportions model, and various theories of industrial organization. The text fully integrates concepts from international finance, and a new chapter for the 2nd edition develops the basic models of open economy macroeconomics. The presentation is centered on graphs that use realistic numerical examples making the theory easier for students to grasp, especially when combined with general algebraic and graphic presentations in the classroom. The text does not assume previous courses in intermediate theory or calculus but the theory is completely developed. Numerous exercises that can be presented by students give them confidence in using the theoretical models and concepts. Over 250 boxed examples illustrate the theory, many with visually descriptive charts and plots, making the text excellent for MBA courses. The text is concise in its presentation style. Students enjoy its clear straightforward style and instructors notice the difference on exams.
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A tariff on imported energy in a small open economy alters production, redistributes income, and generates tariff revenue. The present paper includes tariff revenue in a general equilibrium economy producing two traded goods with imported... more
A tariff on imported energy in a small open economy alters production, redistributes income, and generates tariff revenue. The present paper includes tariff revenue in a general equilibrium economy producing two traded goods with imported energy and domestic capital and labor. An energy tariff reduces energy intensive output and domestic factor income but payment to one domestic factor may rise as might the other output. Tariff revenue, not included in the related theoretical literature, is shown to be concave in the tariff. A simulation illustrates these general equilibrium properties including the revenue maximizing tariff.
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This paper estimates exchange rate sensitivity of US cotton imports for three textile producers with floating or regularly adjusting exchange rates since the 1970s, Bangladesh, Indonesia, and Thailand. The cotton import market model... more
This paper estimates exchange rate sensitivity of US cotton imports for three textile producers with floating or regularly adjusting exchange rates since the 1970s, Bangladesh, Indonesia, and Thailand. The cotton import market model includes mill use, US production cost, and an alternate supply. Empirical analysis examines effects of the Asian financial crisis. Exchange rate behavior and sensitivity varies across the three importers. Aggregation hides information on market reaction. Changes in the rate of depreciation have stronger effects than changes in the level of the exchange rate.
This paper estimates exchange rate sensitivity since the 1970s of US cotton exports to three textile producers with floating or regularly adjusting exchange rates: Bangladesh, Indonesia, and Thailand. The import market model includes mill... more
This paper estimates exchange rate sensitivity since the 1970s of US cotton exports to three textile producers with floating or regularly adjusting exchange rates: Bangladesh, Indonesia, and Thailand. The import market model includes mill use, US production cost, an alternate supply, and the Asian financial crisis. Exchange rate behavior and sensitivity varies considerably across the three importers. Aggregation of the
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This paper investigates exchange rate effects on US tourism trade in structural vector autoregressive models with quarterly data for the floating exchange rate from 1973 to 2007. Tourism export revenue and import spending are examined... more
This paper investigates exchange rate effects on US tourism trade in structural vector autoregressive models with quarterly data for the floating exchange rate from 1973 to 2007. Tourism export revenue and import spending are examined along with the tourism trade balance. Depreciation raises the US tourism trade balance with a unit elastic effect after six quarters with no evidence of J-curve behaviour. Only export revenue is marginally sensitive to the exchange rate. Foreign travel is a luxury good for US tourists, while travel to the USA is a normal good for foreign tourists.
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This book integrates the microeconomics of trade with international finance and open economy macroeconomics. The emphasis throughout is on international competition and the limits of trade policy. Economics began with a debate over... more
This book integrates the microeconomics of trade with international finance and open economy macroeconomics. The emphasis throughout is on international competition and the limits of trade policy. Economics began with a debate over tariffs. Domestic industries lobby for protection against foreign competitors or export subsidies. Government policy makers dole favors in return for cash and votes. Governments negotiate free trade agreements but disregard them when possible with tariffs, export subsidies, and other policies to influence foreign trade and investment. The forces of international competition, however, eventually overwhelm government policy. This text presents the critical issues of international trade and finance. Trade theory includes partial equilibrium market analysis, neoclassical trade models, constant cost production, factor proportions production, and models of industrial organization. The text integrates concepts from international finance and the basic models of open economy macroeconomics. The presentation uses graphs with numerical examples making the theory easier for students, especially when combined with more general classroom presentation. The text does not assume previous courses in intermediate economics or calculus but develops the theory with simple tools. Numerous questions give students confidence to use the theoretical models and concepts. Over 250 boxed examples illustrate the theory, many with visually descriptive charts and plots. The text is concise in its presentation style. Students enjoy its clear straightforward style and instructors notice the difference on exams.
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This paper investigates whether the North American Free Trade Agreement (NAFTA) has had any measurable impact on Alabama pulpwood production since 1993. The method used is to establish a time series model up to the beginning of NAFTA and... more
This paper investigates whether the North American Free Trade Agreement (NAFTA) has had any measurable impact on Alabama pulpwood production since 1993. The method used is to establish a time series model up to the beginning of NAFTA and examine whether there has been a discernable shift since. The time series model is estimated with annual production data from 1953 on pulpwood and its categories softwood and hardwood. Pulpwood has a long history of data at the state level and is a major forest product in the state. An implicit theoretical assumption is that supply has increased over the period at a steady pace. Beyond claims of import damage, an underlying policy issue is the expansion of free trade to include all of the Americas in negotiations toward the Free Trade Area of the Americas (FTAA). This paper also contributes to the empirical literature on the effects of free trade agreements.
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The present paper integrates neoclassical offer curves and production theory, introducing utility maximization and trade levels into the comparative static factor proportions model. The paper analyzes production conditions that determine... more
The present paper integrates neoclassical offer curves and production theory, introducing utility maximization and trade levels into the comparative static factor proportions model. The paper analyzes production conditions that determine the Metzler paradox that a tariff could lower the tariff inclusive import price. The model provides a more complete link between neoclassical and factor proportions trade models.
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Page 1. T. Randolph Beard Henry Thompson Auburn University Efficient versus "Popular" Tariffs for Regulated Monopolies* I. Introduction ... Further, distortions in pricing due to the political nature of regulation are... more
Page 1. T. Randolph Beard Henry Thompson Auburn University Efficient versus "Popular" Tariffs for Regulated Monopolies* I. Introduction ... Further, distortions in pricing due to the political nature of regulation are systematically related to the effects of income on product demand. ...