Accounting for the New Gains from Trade Liberalization

University of Zurich, Department of Economics, Working Paper No. 249

70 Pages Posted: 13 Apr 2017

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: January 31, 2017

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 and 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 (January 31, 2017). University of Zurich, Department of Economics, Working Paper No. 249. Available at SSRN: https://ssrn.com/abstract=2951228 or http://dx.doi.org/10.2139/ssrn.2951228

Chang-Tai Hsieh (Contact Author)

University of Chicago - Booth School of Business ( email )

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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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