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Accounting for the new gains from trade liberalization


Hsieh, Chang-Tai; Li, Nicholas; Ossa, Ralph; Yang, Mu-Jeung (2020). Accounting for the new gains from trade liberalization. Journal of International Economics, 127:103370.

Abstract

We challenge the conventional wisdom on the variety and productivity gains from trade liberalization which are commonly referred to as “new” gains from trade. In particular, we show that the import variety gains measured in studies such as Broda and Weinstein (2006) are counteracted by exactly analogous domestic variety losses. Similarly, we show that the domestic productivity gains measured in studies such as Trefler (2004) are counteracted by exactly analogous import productivity losses. We then account for all these gains and losses in an application to the Canada-US Free Trade Agreement and show that Canada actually experienced net “new” losses from trade.

Abstract

We challenge the conventional wisdom on the variety and productivity gains from trade liberalization which are commonly referred to as “new” gains from trade. In particular, we show that the import variety gains measured in studies such as Broda and Weinstein (2006) are counteracted by exactly analogous domestic variety losses. Similarly, we show that the domestic productivity gains measured in studies such as Trefler (2004) are counteracted by exactly analogous import productivity losses. We then account for all these gains and losses in an application to the Canada-US Free Trade Agreement and show that Canada actually experienced net “new” losses from trade.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Finance
Social Sciences & Humanities > Economics and Econometrics
Uncontrolled Keywords:Economics and Econometrics, Finance
Language:English
Date:1 November 2020
Deposited On:10 Aug 2021 16:14
Last Modified:13 Aug 2021 14:05
Publisher:Elsevier
ISSN:0022-1996
OA Status:Hybrid
Publisher DOI:https://doi.org/10.1016/j.jinteco.2020.103370

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