An Experimental Investigation of the Patterns of International Trade

Noussair, Charles; Plott, Charles R.; Riezman, Raymond

doi:10.1142/9789814390125_0017

Cited by 117 publications

(77 citation statements)

References 12 publications

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“…The figures show an orderly development, as is also observed in other multiple 18 Recall that the initial tax rates in the STLS-system are determined by using the outcomes of the constant tax regime of the WT-system. This general impression is confirmed by a convergence analysis based on the following estimation model (see Noussair, Plott, and Riezman (1995)):…”

Section: Constant Tax Regimementioning

confidence: 65%

Input versus output taxation in an experimental international economy

Riedl

Winden

2012

European Economic Review

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This paper is concerned with a policy oriented macroeconomic experiment involving an 'international' economy with a relatively small 'home' country and a large 'foreign' country. It compares the economic performance of two alternative tax systems as a means to finance unemployment benefits: a sales-tax-cum-labor-subsidy system versus a wage tax system. The two systems are applied to the home country, while the wage tax system always obtains in the foreign country. In stark contrast with expectations of experts the sales tax system clearly outperforms the wage tax system, using standard economic indicators. It is argued that producers' reluctance to incur costs up-front while being uncertain about product prices can explain this outcome. Several pieces of evidence are provided to support this claim.The results strongly suggest that behavioral aspects have to be taken into account also in applied macroeconomic models.JEL Classification Number: A10, C90, C91, D21, D80, E62, H20

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Section: Constant Tax Regimementioning

confidence: 65%

Input versus output taxation in an experimental international economy

Riedl

Winden

2012

European Economic Review

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“…While the costs of produced output are still sunk in this setting, production can adjust upwards in response to current market period conditions. This seems to allow for full equilibration in simple one output good economies (Goodfellow and Plott, 1990;Bosch-Domènech and Silvestre, 1997) and movement towards equilibrium in complex economies with multiple input and output goods (Noussair et al, 1995(Noussair et al, , 1997(Noussair et al, , 2007. However, in all of these cases convergence still occurs from too little production and the ratio of input to output prices from below the equilibrium ratio.…”

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confidence: 99%

The Hayek Hypothesis and Long Run Competitive Equilibrium: An Experimental Investigation

Shachat

Zhang

2012

SSRN Journal

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The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. AbstractWe report on an experiment investigating whether the Hayek Hypothesis (Smith, 1982) extends to the long run setting. We consider two environments; one with a production technology having a U-shaped long run average cost curve and a single competitive equilibrium, and another with a constant long run average cost curve. We present alternative efficient production plans as a menu of fixed and marginal cost pairs. In both environments, we observe convergence to long run competitive equilibrium prices and quantities typically within six long run decision horizons.JEL classification: C92; D02

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“…Result 10 In an earlier work (Noussair et al 1995), we demonstrated that the patterns of production and trade predicted by the law of comparative advantage are observed in an experimental market. In those markets, members of different countries used the same currency.…”

Section: Resultsmentioning

confidence: 71%

The Principles of Exchange Rate Determination in an International Finance Experiment

Noussair

Plott

Riezman

2013

International Trade Agreements and Political Economy

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This paper reports the first experiments designed to explore the behavior of economies with prominent features of international finance. Two ''countries,'' each with its own currency, were created. International trade could take place only through the operation of markets for currency. The law of one price and the flow of funds theory of exchange rate determination were used to produce general equilibrium models that captured much of the behavior of the economies. Prices of goods, as well as the exchange rate, evolve over time toward the predictions of the models. However, We wish to acknowledge the financial support of the National Science Foundation and the Caltech Laboratory for Experimental Economics and Political Science. The cooperation of the Center for Research in Experimental Economics and Political Decision-Making at the University of Amsterdam was important for the conduct of experiments in Amsterdam. We also wish to thank Mark Olson for his assistance with the Amsterdam experiments. The help of Hsing-Yang Lee with the electronic market programs made the study possible. An earlier version of this paper was presented at the Allied Social Sciences Association annual meetings in January 1994. We thank Marianne Baxter for her helpful suggestions as discussant of the paper, and Lars Peter Hansen for his helpful suggestions. [ Journal of Political Economy, 1997, vol. 105, no. 4] © 1997 by The University of Chicago. All rights reserved. 0022-3808/97/0504-0009$02.50 822 exchange rate determination 823 both the law of one price and purchasing power parity can be rejected for reasons that do not appear in the literature. Patterns of international trade were as predicted by the law of comparative advantage.

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An Experimental Investigation of the Patterns of International Trade

Cited by 117 publications

References 12 publications

Input versus output taxation in an experimental international economy

Input versus output taxation in an experimental international economy

The Hayek Hypothesis and Long Run Competitive Equilibrium: An Experimental Investigation

The Principles of Exchange Rate Determination in an International Finance Experiment

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