The Welfare Cost of Autarky: Evidence from the Jeffersonian Trade Embargo, 1807-1809
31 Pages Posted: 20 Dec 2001 Last revised: 1 Nov 2005
Date Written: December 2001
The United States came close to complete autarky in 1808 as a result of a self-imposed embargo on international shipping from December 1807 to March 1809. Monthly prices of exported and imported goods reveal the embargo's striking effect on commodity markets and allow a calculation of its welfare effects. A simple general equilibrium calculation suggests that the embargo cost about 8 percent of America's 1807 GNP, at a time when the trade share was about 13 percent (domestic exports and shipping earnings). The welfare cost was lower than the trade share because the embargo did not completely eliminate trade and because domestic producers successfully shifted production toward previously imported manufactured goods.
Suggested Citation: Suggested Citation