Accounting for the New Gains from Trade Liberalization

59 Pages Posted: 7 Mar 2016  

Chang-Tai Hsieh

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

Nicholas Li

University of Toronto - Department of Economics

Ralph Ossa

University of Chicago - Booth School of Business

Mu-Jeung Yang

University of Washington - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: March 01, 2016

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 find that the "new" welfare effects of CUSFTA on Canada were negative.

Keywords: Gains from trade, trade liberalization, CUSFTA

JEL Classification: F10, F12, F14

Suggested Citation

Hsieh, Chang-Tai and Li, Nicholas and Ossa, Ralph and Yang, Mu-Jeung, Accounting for the New Gains from Trade Liberalization (March 01, 2016). US Census Bureau Center for Economic Studies Paper No. CES-WP- 16-14. Available at SSRN: https://ssrn.com/abstract=2743234 or http://dx.doi.org/10.2139/ssrn.2743234

Chang-Tai Hsieh (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nicholas Li

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada

Ralph Ossa

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Mu-Jeung Yang

University of Washington - Department of Economics ( email )

Box 353330
Seattle, WA 98195-3330
United States

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