Accounting for the New Gains from Trade Liberalization

69 Pages Posted: 21 Mar 2016 Last revised: 15 Apr 2016

See all articles by Chang-Tai Hsieh

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 2016

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.

Suggested Citation

Hsieh, Chang-Tai and Li, Nicholas and Ossa, Ralph and Yang, Mu-Jeung, Accounting for the New Gains from Trade Liberalization (March 2016). NBER Working Paper No. w22069. Available at SSRN: https://ssrn.com/abstract=2752291

Chang-Tai Hsieh (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
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University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
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National Bureau of Economic Research (NBER)

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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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