Accounting for the New Gains from Trade Liberalization
59 Pages Posted: 7 Mar 2016
Date Written: March 01, 2016
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: Suggested Citation