Wilfred J. Ethier on trade and trade policy

• Date: 01 March 2014
• Author: Makoto Yano,Kazuo Nishimura,Henrik Horn
• DOI: http://doi.org/10.1111/ijet.12024
• Published date: 01 March 2014

doi: 10.1111/ijet.12024

Introduction

Wilfred J. Ethier on trade and trade policy

Henrik Horn,∗Kazuo Nishimura†and Makoto Yano‡

Accepted 31 October 2013

This special issue is to celebrate Wilfred J. Ethier, who passed the 70-year mark earlier this year.

There are many reasons to celebrate Bill. For instance, Bill is extremely warm and kind, and he has

a profound sense of humor, with a particular taste for the absurd and for self-irony. But Bill is not

just a truly great friend, he is also a great and much admired scholar, which is the pretextfor putting

together this issue.

Bill took an A. B. in Mathematics at the Universityof Rochester, where he stayed to takea Ph.D. in

Economics with Ronald W.Jones as main advisor and Lionel McKenzie as a teacher-quite some start

for a career as a trade theorist! In 1969, Bill became Assistant Professor at Universityof Pennsylvania,

where he remained until retirement earlier this year. Over the years Bill has been a frequent flyer,

holding visiting positions in a large number of departments and institutes, such as in Stockholm,

Jerusalem, Osaka, Turin,Rotterdam, Kiel, Copenhagen, Kobe, Hong Kong, Seoul, and Tbilisi.

Bill’s work is easily characterized in certain respects: It is all theory. It is all international eco-

nomics. It is all highly original. It is all elegantly packaged in almost literary prose. It is (almost) all

hard reading.

Much harder to describe in a few words are all the contributions he has made to the literature.

What follows only superficially describes the broad contours of his work to date.

One of the first issues that Bill highlighted was the notion of the effective rate of protection. The

idea behind this concept, which was very popular among applied trade economists in the 1960s and

1970s, is to measure the net tariff protection provided to an industry, taking into account not only

direct tariff protection of the industry, but also tariffs on goods that are used as inputs through the

whole chain of production of the good. Bill immediately revealed his analytical skills, in particular

through a celebrated paper [3] that highlighted the restrictiveness of the conditions under which the

measure would be useful in practice. These skills were also displayed early in his career in his work

on open-economy macro issues, and in particular exchange rate dynamics.

True to his academic origins, Bill spent much of the 1970s and the 1980s extending the neo-

classical trade model in a number of directions. Two themes were particularly prominent. One

concerned the role of the dimensionality of the classical trade model, which assumes a setting where

two countries trade two goods that are produced using two factors of production: the “2 ×2×2”

model. In seminal work Bill showed how the basic predictions from this model concerning, for

∗Research Institute of Industrial Economics (IFN), Stockholm, Sweden; Bruegel, Brussels, Belgium; and Centre for Eco-

nomic Policy Research,London, England. Email: henr ik.horn@ifn.se

†Research Institute for Economicsand Business Administration, Kobe University, Kobe, Japan.

‡Institute of Economic Research,Kyoto University, Kyoto, Japan.

International Journal of Economic Theory 10 (2014) 1–7 © IAET 1

International Journal of Economic Theory