Capital accumulation and the welfare gains from trade

Brooks, Wyatt; Pujolás, Pau S.

doi:10.1007/s00199-017-1070-z

Cited by 17 publications

(7 citation statements)

References 23 publications

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“…Alessandria and Choi (2014a) show that the recent growth of U.S. manufacturing can be accounted for in models with dynamic export decision. Finally, Alessandria and Choi (2014b), Alessandria et al (2014), and Brooks and Pujolas (2018) show that the gains from trade that arise after a trade liberalization are larger when dynamics are taken into account.…”

Section: Introductionmentioning

confidence: 94%

Gains From Trade With Variable Trade Elasticities

Brooks

Pujolás

2019

Int Economic Review

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We measure gains from trade in multisector economies with nonhomothetic preferences where changes in trade costs generate reallocation of expenditure across sectors. We show how to measure the trade elasticity and how it relates to welfare. In this environment, the trade elasticity now varies both across countries and with levels of trade costs. In an application, we find that the trade elasticity varies substantially across countries and that the gains from moving from autarky to observed trade are on average between 24% and 28% greater than in a model where the trade elasticity is constant.

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Section: Introductionmentioning

confidence: 94%

Gains From Trade With Variable Trade Elasticities

Brooks

Pujolás

2019

Int Economic Review

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“…Recently, there have been a few papers computing gains from trade in dynamic models, e.g., Anderson, Larch, and Yotov (2020), Brooks and Pujolas (2018), Alvarez (2017), Ravikumar, Santacreu, and Sposi (2019), Mix (2020), and Alessandria, Choi, and Ruhl (2021). In this article, we decompose the dynamic gains from trade into gains from capital accumulation versus gains due to total factor productivity (TFP) changes.…”

Section: Introductionmentioning

confidence: 99%

TFP, Capital Deepening, and Gains from Trade

Ravikumar¹,

Santacreu²,

Sposi³

2023

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Using a dynamic, multicountry model with capital accumulation, we compute the exact transition paths for 93 countries following a permanent, uniform, unanticipated trade liberalization and calculate the resulting welfare gains from trade. We find that while the dynamic gains are different across countries, consumption transition paths look similar except for scale. In addition, dynamic gains accrue gradually and are about 60 percent of steady-state gains for every country. Finally, the contribution of capital accumulation to dynamic gains is four times that of total factor productivity.

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“…Finally, a number of other recent studies have analyzed the macroeconomic effects of trade policy reforms and other shocks in dynamic, open‐economy models with adjustment frictions on investment (Bajona and Kehoe , Brooks and Pujolas , Ravikumar et al. , Eaton et al.…”

Section: Introductionmentioning

confidence: 99%

The macroeconomic impact of NAFTA termination

Steinberg

2020

Canadian J of Economics

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US President Trump has threatened to leave the North American Free Trade Agreement. How much would each member country gain or lose if this threat were carried out? Would trade imbalances within the region diminish? What would the transition to new production and consumption patterns look like? I provide quantitative answers to these questions using a dynamic general equilibrium model with a multi‐sector input–output production structure, heterogeneous firms that make forward‐looking export participation decisions, and adjustment frictions in trade and factor markets. Regional trade flows would fall dramatically, and while the US trade deficit with Canada would decline, the deficit with Mexico would grow. Welfare would fall by 0.04%, 0.12%, and 0.2% in the United States, Canada, and Mexico, respectively, and transition dynamics would significantly affect welfare in both the short run and the long run.

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Capital accumulation and the welfare gains from trade

Cited by 17 publications

References 23 publications

Gains From Trade With Variable Trade Elasticities

Gains From Trade With Variable Trade Elasticities

TFP, Capital Deepening, and Gains from Trade

The macroeconomic impact of NAFTA termination

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