The Ricardian proposition that international trade will benefit any co

The Ricardian proposition that international trade will benefit any country (“gains from trade”) as long as the world terms of trade do not equal its autarkic relative prices is a straightforward and powerful concept.

Nevertheless, it is impossible to demonstrate empirically. Why?

 

ANSWER

This is because there is no way of knowing exactly what are, or would have been, the autarky MRTs or MRSs. This is because there is no single example in the world of a country that is totally unengaged in international trade.

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