Gains from Domestic versus International Trade: Evidence from the U.S.
Journal of International Trade & Economic Development, Forthcoming
43 Pages Posted: 3 Jan 2017 Last revised: 10 Dec 2020
Date Written: July 29, 2019
Using varieties of a rich model that considers sectoral heterogeneity and input-output linkages, this paper shows that the overall welfare gains of a region within a country can be decomposed into domestic versus international welfare gains from trade. Empirical results based on sector- and state-level data from the U.S. suggest that about 94 percent of the overall welfare gains of a state is due to domestic trade with other states. The ocean states gain from international trade about two times the Great Lake states and about three times the landlocked states.
Keywords: Welfare Gains, Domestic Trade, Sectoral Heterogeneity, State-Level Analysis
JEL Classification: F12, F14, R13
Suggested Citation: Suggested Citation