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Switzerland's gains from trade with Europe:

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  • Christian Hepenstrick

Abstract

In this paper I look at the size of Switzerland's gains from trade through the lens of the workhorse model of modern trade theory. The model finds that most of Switzerland's gains from trade originate from the EU and that realistic changes in the degree of trade integration with EU countries may have non-trivial - but at same time not excessively large - effects on Swiss percapita incomes. The model also suggests that further trade integration with third countries, such as China and India, tends to increase Swiss welfare, but is unlikely to be able to compensate for possible losses stemming from deteriorating trade relations with European countries.

Suggested Citation

  • Christian Hepenstrick, 2016. "Switzerland's gains from trade with Europe:," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 67(03), pages 25-42, December.
  • Handle: RePEc:usg:auswrt:2016:67:03:25-42
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    References listed on IDEAS

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    1. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
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    3. Marc J. Melitz & Stephen J. Redding, 2015. "New Trade Models, New Welfare Implications," American Economic Review, American Economic Association, vol. 105(3), pages 1105-1146, March.
    4. Peter Egger & Martin Gassebner & Andrea Lassmann, 2009. "Armington Product Variety Growth in Small versus Large Countries," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 145(IV), pages 411-419, December.
    5. Lukas Mohler, 2011. "Variety Gains from Trade in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(I), pages 45-70, March.
    6. Christian Hepenstrick & Alexander Tarasov, 2015. "Trade Openness and Cross-country Income Differences," Review of International Economics, Wiley Blackwell, vol. 23(2), pages 271-302, May.
    7. Christian Hepenstrick, 2016. "The Sources and Magnitudes of Switzerland's Gains from Trade," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 152(I), pages 1-21, March.
    8. Michael E. Waugh, 2010. "International Trade and Income Differences," American Economic Review, American Economic Association, vol. 100(5), pages 2093-2124, December.
    9. Costas Arkolakis & Arnaud Costinot & Andres Rodriguez-Clare, 2012. "New Trade Models, Same Old Gains?," American Economic Review, American Economic Association, vol. 102(1), pages 94-130, February.
    10. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
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    Cited by:

    1. Reto Foellmi, 2016. "Comment on "Switzerland's gains from trade with Europe" by Christian Hepenstrick:," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 67(03), pages 43-45, December.

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    More about this item

    Keywords

    Gains from trade; Switzerland; Europe; Development accounting;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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