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Estimating the welfare costs of autarky: a sufficient statistics approach

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  • Esposito, Federico

Abstract

This paper uses the Jeffersonian Embargo enacted in 1807 to estimate the welfare costs of autarky. I use an Armington trade model to compute the welfare losses using two sufficient statistics: the share of expenditures on domestic goods and the elasticity of substitution between domestic and imported goods. I use historical data from 1792 to 1807 to estimate the Armington elasticity, using import tariffs as instrument for relative prices. The empirical findings suggest welfare losses of 2.83-8.14% of real income.

Suggested Citation

  • Esposito, Federico, 2020. "Estimating the welfare costs of autarky: a sufficient statistics approach," MPRA Paper 100120, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:100120
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    References listed on IDEAS

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    8. Esposito, Federico, 2019. "Demand Risk and Diversification through Trade," MPRA Paper 99875, University Library of Munich, Germany.
    9. Costinot, Arnaud & Rodríguez-Clare, Andrés, 2014. "Trade Theory with Numbers: Quantifying the Consequences of Globalization," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 197-261, Elsevier.
    10. Robert C. Feenstra & Philip Luck & Maurice Obstfeld & Katheryn N. Russ, 2018. "In Search of the Armington Elasticity," The Review of Economics and Statistics, MIT Press, vol. 100(1), pages 135-150, March.
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    13. Douglas A. Irwin, 2005. "The Welfare Cost of Autarky: Evidence from the Jeffersonian Trade Embargo, 1807–09," Review of International Economics, Wiley Blackwell, vol. 13(4), pages 631-645, September.
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    15. Rodrigo Ad'o & Costas Arkolakis & Federico Esp'sito, 2019. "Spatial Linkages, Global Shocks, and Local Labor Markets: Theory and Evidence," Cowles Foundation Discussion Papers 2163, Cowles Foundation for Research in Economics, Yale University.
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    Cited by:

    1. Ambec, Stefan & Esposito, Federico & Pacelli, Antonia, 2024. "The economics of carbon leakage mitigation policies," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    2. Moghaddasi Kelishomi, Ali & Nisticò, Roberto, 2022. "Employment effects of economic sanctions in Iran," World Development, Elsevier, vol. 151(C).
    3. Esposito, Federico, 2022. "Demand risk and diversification through international trade," Journal of International Economics, Elsevier, vol. 135(C).
    4. Ali Moghaddasi Kelishomi & Roberto Nisticò, 2021. "Employment Effects of Economic Sanctions," CSEF Working Papers 615, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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    More about this item

    Keywords

    Autarky; welfare gains from trade; Jeffersonian Embargo; Armington elasticity;
    All these keywords.

    JEL classification:

    • F00 - International Economics - - General - - - General
    • N0 - Economic History - - General
    • N00 - Economic History - - General - - - General
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services
    • N71 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: Pre-1913

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