The Us Gains from Trade: Valuation Using the Demand for Foreign Factor Services

Costinot, Arnaud; Rodríguez-Clare, Andrés

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The Us Gains from Trade: Valuation Using the Demand for Foreign Factor Services

NBER Working Paper No. w24407

32 Pages Posted: 20 Mar 2018 Last revised: 11 Mar 2023

See all articles by Arnaud Costinot

Arnaud Costinot

University of California, San Diego (UCSD) - Department of Economics; Massachusetts Institute of Technology (MIT) - Department of Economics

Andrés Rodríguez-Clare

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

There are 2 versions of this paper

Date Written: March 2018

Abstract

About 8 cents out of every dollar spent in the United States is spent on imports. What if, because of a wall or some other extreme policy intervention, imports were to remain on the other side of the US border? How much would US consumers be willing to pay to prevent this hypothetical policy change from taking place? The answer to this question represents the welfare cost from autarky or, equivalently, the welfare gains from trade. In this article, we discuss how to evaluate these gains using the demand for foreign factor services. The estimates of gains from trade for the US economy that we review range from 2 to 8 percent of GDP.

Suggested Citation: Suggested Citation

Costinot, Arnaud and Costinot, Arnaud and Rodríguez-Clare, Andrés, The Us Gains from Trade: Valuation Using the Demand for Foreign Factor Services (March 2018). NBER Working Paper No. w24407, Available at SSRN: https://ssrn.com/abstract=3143312