Retrospectives

On the Genius Behind David Ricardo's 1817 Formulation of Comparative Advantage

Dados Bibliográficos

ID14855152
AutoresDaniel M Bernhofen (0000-0002-3040-9590, Daniel M. Bernhofen is Professor of International Relations, School of International Service, American University, Washington, DC. Bernhofen is the corresponding author at), John C Brown (John C. Brown is Professor of Economics, Clark University Worcester, Massachusetts.)
Ano2018
Volume32
Fascículo4
Páginas227-240
Data de publicação2018-11-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoThe Journal of Economic Perspectives (JOURNAL)
Identificadores do periódicoISSN: 0895-3309 • E-ISSN: 1944-7965
EditoraAmerican Economic Association (PUBLISHER • US)
DOI10.1257/jep.32.4.227
IdiomaEN
Citações recebidas3
Referências citadas13

Last year marked the 200th anniversary of Ricardo’s famous “four numbers” paragraph on comparative advantage, which is one of the oldest analytical results in economics. Following the lead of James Mill (1821), these four numbers have been interpreted as unit labor coefficients. This interpretation has provided the basis for the development of the ‘Ricardian model’ from John Stuart Mill (1852) to Eaton and Kortum (2002). However, if we accept the labor unit interpretation of these numbers, Ricardo’s exposition in his 1817 Principles of Political Economy and Taxation makes little logical sense. Building on Sraffa’s (1930) interpretation of Ricardo’s numbers as labor embodied in trade, our discussion reveals the amazing simplicity and generality of Ricardo’s comparative advantage formulation and gains-from-trade logic

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