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Accounting for the new gains from trade liberalization

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Listed:
  • Chang-Tai Hsieh
  • Nicholas Li
  • Ralph Ossa
  • Mu-Jeung Yang

Abstract

We measure the "new" gains from trade reaped by Canada as a result of the Canada-US Free Trade Agreement (CUSFTA). We think of the "new" gains from trade of a country as all welfare effects pertaining to changes in the set of firms serving that country as emphasized in the so-called "new" trade literature. To this end, we first develop an exact decomposition of the gains from trade which separates "traditional" and "new" gains. We then apply this decomposition using Canadian and US micro data and and that the "new" welfare effects of CUSFTA on Canada were negative.

Suggested Citation

  • Chang-Tai Hsieh & Nicholas Li & Ralph Ossa & Mu-Jeung Yang, 2017. "Accounting for the new gains from trade liberalization," ECON - Working Papers 249, Department of Economics - University of Zurich.
    • Handle: RePEc:zur:econwp:249
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    References listed on IDEAS

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    Cited by:

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    2. Lorenzo Caliendo & Robert C. Feenstra & John Romalis & Alan M. Taylor, 2015. "Tariff Reductions, Entry, and Welfare: Theory and Evidence for the Last Two Decades," NBER Working Papers 21768, National Bureau of Economic Research, Inc.
    3. Philipp Imhof, 2021. "Switzerland's system of free trade agreements: Assessing the impact on imported goods," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 71(01), pages 35-72, December.
    4. Massimiliano Bratti & Luca De Benedictis & Gianluca Santoni, 2020. "Immigrant entrepreneurs, diasporas, and exports," Journal of Regional Science, Wiley Blackwell, vol. 60(2), pages 249-272, March.
    5. Gouranga G. Das & Zeynep Akgul & Badri G. Narayanan, 2023. "How Do Productivity Benefits Spill Over Across Firms? Explorations in a Heterogeneous Firm Applied General Equilibrium Trade Model," Politická ekonomie, Prague University of Economics and Business, vol. 2023(2), pages 104-129.
    6. Lukaszuk, Piotr & Torun, David, 2022. "Harmonizing the Harmonized System," Economics Working Paper Series 2212, University of St. Gallen, School of Economics and Political Science.
    7. Hsieh, Chang-Tai & Li, Nicholas & Ossa, Ralph & Yang, Mu-Jeung, 2023. "Gains from trade liberalization with flexible extensive margin adjustment," Journal of International Economics, Elsevier, vol. 142(C).
    8. Yuan Mei, 2024. "Regulatory Protection And The Role Of International Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(2), pages 817-850, May.
    9. Baldwin, Richard & Okubo, Toshihiro, 2019. "GVC journeys: Industrialisation and deindustrialisation in the age of the second unbundling," Journal of the Japanese and International Economies, Elsevier, vol. 52(C), pages 53-67.
    10. Nicholas Li, 2021. "An Engel Curve for Variety," The Review of Economics and Statistics, MIT Press, vol. 103(1), pages 72-87, March.
    11. Colin J. Hottman & Ryan Monarch, 2018. "Estimating Unequal Gains across U.S. Consumers with Supplier Trade Data," Working Papers 18-04, Center for Economic Studies, U.S. Census Bureau.
    12. Lodge, David & Pérez, Javier J. & Albrizio, Silvia & Everett, Mary & De Bandt, Olivier & Georgiadis, Georgios & Ca' Zorzi, Michele & Lastauskas, Povilas & Carluccio, Juan & Parrága, Susana & Carvalho,, 2021. "The implications of globalisation for the ECB monetary policy strategy," Occasional Paper Series 263, European Central Bank.
    13. Gnangnon, Sèna Kimm, 2021. "Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Growth in Beneficiary Countries," EconStor Preprints 242848, ZBW - Leibniz Information Centre for Economics.
    14. Vrolijk, Kasper, 2023. "How does globalisation affect social cohesion?," IDOS Discussion Papers 5/2023, German Institute of Development and Sustainability (IDOS).
    15. Cheong, Juyoung, 2023. "Do preferential trade agreements stimulate high-tech exports for low-income countries?," Economic Modelling, Elsevier, vol. 127(C).
    16. Hottman, Colin J. & Monarch, Ryan, 2020. "A matter of taste: Estimating import price inflation across U.S. income groups," Journal of International Economics, Elsevier, vol. 127(C).
    17. Yanjun Chang & Liuliu Lai, 2023. "Effects and Mechanisms of China’s Pilot Free Trade Zones on Green and High-Quality Development from the Dual-Circulation Perspective," Sustainability, MDPI, vol. 15(2), pages 1-17, January.
    18. Chang-Tai Hsieh & Nicholas Li & Ralph Ossa & Mu-Jeung Yang, 2022. "Gains from Trade Liberalization with Flexible Extensive Margin Adjustment," Working Papers 083, Toronto Metropolitan University, Department of Economics.

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    More about this item

    Keywords

    Gains from trade; trade liberalization; CUSFTA;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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