Methodology: Critiquing Arguments Think of this as How to be an economist Method: 1)Replicate the argument 2)Identify assumptions 3)Change an assumption 4)Argue to conclusion Same conclusion? Go to #3 New conclusion? Go to #5 5)Verify empirically or argue rhetorically in favor of the validity of your alternative assumption No more than 500 words please. This paper is based on grading ruburic. so please follow it. I attached the article and ruburic files. Use quotations at least 2 in the article.
The article talks about “Why the decline in manufacturing?”
• Which of these two explanations is most powerful?
1. Internal factors
– Substitution effect due to price changes due to differences in
productivity growth
– Income effect due to rising income causing shift in demand from
manufactures to services
2. External factors
– Increased trade leading to substitution of manufactures for
services
Results
• Data: 1963-94 for 18 industrial countries
• Income
– Demand for manufactures increases at a decreasing rate
– Key is “where’s the turning point?”
• Productivity growth captured with price effect
– Higher productivity, lower prices, higher quantity demanded
– Offsets part of income effect
• Trade
– More net exports of manufactures increases manufacturing
– But little (if any) effect of imports from low-wage countries
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