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A multi-sector analysis of Switzerland's gains from trade

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  • Dr. Laurence Wicht

Abstract

This paper quantifies Switzerland's gains from trade using a multi-country multi-sector general equilibrium Ricardian trade model. The model calibration relies on a novel data source on sectoral linkages to provide a Switzerland-centric analysis. I find that using this novel dataset generates 13.4% higher estimates of the gains from trade for Switzerland, as other data sources tend to underestimate Swiss sectors' exposure to foreign markets. Using this quantitative framework, I then perform a policy-oriented counterfactual analysis to assess the gains from Switzerland's trade integration. I find that Switzerland's wide free trade agreement (FTA) network is associated with small real GDP gains but significantly shapes trade flows. Without Switzerland's FTA network, Swiss real exports decline by -6.9%, while imports decline by -7.6%. An FTA with the US raises real GDP in Switzerland and in the US, albeit only slightly, while CH-US real bilateral trade increases by approximately +7%.

Suggested Citation

  • Dr. Laurence Wicht, 2020. "A multi-sector analysis of Switzerland's gains from trade," Working Papers 2020-20, Swiss National Bank.
    • Handle: RePEc:snb:snbwpa:2020-20
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    File URL: https://www.snb.ch/en/publications/research/working-papers/2020/working_paper_2020_20
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    References listed on IDEAS

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    Cited by:

    1. Claudia Bernasconi, 2019. "Comment on "The impact of trade wars on Switzerland: A quantitative assessment" by Laurence Wicht," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 70(01), pages 35-38, December.

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    More about this item

    Keywords

    Gains from trade; input-output linkages; free trade agreements;
    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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