The Cost of Non-TTIP: A Global Value Chain Approach

KU LEUVEN - Discussion Paper Series, DPS18.02, February 2018

44 Pages Posted: 12 Mar 2018

See all articles by Hylke Vandenbussche

Hylke Vandenbussche

Catholic University of Leuven (KUL), CEPR

William Connell Garcia

KU Leuven - Faculty of Business and Economics (FEB)

Wouter Simons

KU Leuven - Faculty of Business and Economics (FEB)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2018

Abstract

What is the cost of non-TTIP for the European Union and the United States? To address this question, this paper develops a network trade model with international sector-level input-output linkages. Our model is entirely general with closed-form solutions and can be used for any trade policy experiment. We use World Input Output Data (WIOD) to simulate the effects of TTIP in terms of value added and employment. We find that a deep TTIP raises European GDP by 1.3%, and US GDP by 0.7%. The largest share of these TTIP gains result from the reduction in Non-Tariff Barriers (NTBs) rather than from the removal of tariffs. The potential gains from TTIP are higher for the EU than for the US. These findings may offer an explanation for the current US stance on TTIP.

Keywords: networks, global value chains, Leontief inverse matrix, TTIP

JEL Classification: F10, F13, F47, F62

Suggested Citation

Vandenbussche, Hylke and Connell Garcia, William and Simons, Wouter, The Cost of Non-TTIP: A Global Value Chain Approach (February 2018). KU LEUVEN - Discussion Paper Series, DPS18.02, February 2018, Available at SSRN: https://ssrn.com/abstract=3135714 or http://dx.doi.org/10.2139/ssrn.3135714

Hylke Vandenbussche (Contact Author)

Catholic University of Leuven (KUL), CEPR ( email )

Faculty of Economics
Naamsestraat 69
B-3000 Leuven, 3000
Belgium
+32 16 326 920 (Phone)
+32 16 326 732 (Fax)

HOME PAGE: https://www.sites.google.com/site/vandenbusschehylke/home-1

William Connell Garcia

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Wouter Simons

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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