An Outsourcing Finger Exercise: Archive Entry From Brad DeLong’s Webjournal:
A Finger Exercise:
Let’s try a finger exercise to evaluate the effects of expanded international trade via “outsourcing” on an economy. We’ll set up a simple model–not a realistic model, an unrealistic model, a model that has only the features we absolutely need to understand the principal impacts of expanded trade on an economy.
The model is simple but works well enough to demonstrate what principals are at work here. And the comments, though a bit stroppy at times, are informative. Needless to say, not everyone agrees with the model or it’s conclusions.