Essays on global factor trade and new open economy macroeconomics

There are three essays in this dissertation. The first two essays investigate two different suggestions on how to improve the Heckscher-Ohlin-Vanek (HOV) model's prediction and the third essay investigates the net foreign asset movements in the new open economy macroeconomics.; The HOV model's assumption of identical factor intensity techniques across countries is suspected to be one of the major causes of its poor performance. However, this assumption had hardly been relaxed because many countries do not publish input-output tables and factor usage data that are required to assess their factor intensity techniques applied. The first essay, “Global Factor Trade with Differentiated Factor Intensity Techniques Applied in All Countries,” introduces a factor intensity technique inferring method that can allow us to derive different factor intensity techniques of different countries. Using this inferring method, a modified HOV model is established and it improves the performance of the original HOV model significantly.; Leontief (1953) suggested that the international differences in labor productivity might explain the Leontief paradox; however, a clear definition of factor productivities was not provided in his suggestion. Ignoring what factor productivities are or what causes the international factor productivity differences, the second essay, “Factor-Augmented Productivity in International Trade: When is Leontief Right?” computes the arbitrary factor-augmented productivities based on Leontief's idea. It shows that Leontief's explanation can always explain the different production patterns across countries. If the standard assumptions about the consumption side relationship hold, Leontief's explanation can perfectly explain the poor empirical performance of the HOV model as well.; In the literature of new open economy macroeconomics, short run and long run changes in the net foreign asset resulting from an exogenous monetary shock are the same. Nevertheless, this is theoretically inconsistent with the steady state behavior of the economy. The third essay, “Higher-Order Properties of the ‘Redux’ Model (with Jinill Kim),” approximates the changes in the net foreign asset with the second order Taylor expansion instead of the conventional first order expansion and determines the difference between its short run and long run changes.