Publication

This paper reconsiders the effects of long-run economic growth on relative factor prices across cones of specialization. The authors model economic growth as exogenous technical change. Allowing for capital biased technical change with a sector bias and for endogenous commodity prices, they find that economic growth may increase or decrease factor price differences across cones. For a neutral demand side and capital biased growth in the most capital intensive sector, they find that economic growth encourages less factor price diversity across cones.