True/False: Decide whether the following statements are true or false. If a statement is true, just state that it is true. If a statement is false, state that it is false and restate it so that it becomes an economically meaningful true statement. (15P, 3P each) [Hint: You need to remain in the context of the original statement. So don’t change it into a different true statement such as, “Janet Yellen was the former Chair the US Federal Reserve”].

a. Identifying the causal impact of international trade requires a comparison with a counterfactual world without open trade. However, the longevity of the current period of globalization makes that difficult.

b. Japan’s 19th century opening up to world commerce offers a unique opportunity to test the theory of comparative advantage because it satisfies two conditions: goods and factor price data from autarky reflected competitive market conditions and the transition from autarky to an open trade regime was so rapid that we observe many significant changes to the fundamentals of the economy.

c. Consistent with the theoretical predictions of comparative advantage, Bernhofen and Brown’s research on 19th century Japan shows that Japan exported products with relatively low autarky prices and imported products with relatively high autarky prices.

d. By 1869, the price of Japan’s main export-silk industry products- had been cut by half in real terms and many importable products saw price increases of 30-70%. e. The gains from Japan’s opening to trade after a long period of autarky represented about 50% of GDP.