Working Paper: CEPR ID: DP12705
Authors: Hylke Vandenbussche; William Connell; Wouter Simons
Abstract: What is the cost of non-TTIP for the European Union and the United States? To addressthis question, this paper develops a network trade model with international sector-levelinput-output linkages. Our model is entirely general with closed-form solutions and canbe used for any trade policy experiment. We use World Input Output Data (WIOD) tosimulate the effects of TTIP in terms of value added and employment. We find that a deepTTIP raises European GDP by 1.3%, and US GDP by 0.7%. The largest share of theseTTIP gains result from the reduction in Non-Tariff Barriers (NTBs) rather than from theremoval 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 Codes: F10; F13; F47; F62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| TTIP (F13) | European GDP (O52) |
| TTIP (F13) | US GDP (E20) |
| Reduction in NTBs (F13) | European GDP (O52) |
| Reduction in NTBs (F13) | US GDP (E20) |
| TTIP (F13) | Belgian steel sector impact (L61) |
| Upstream production linkages (D20) | Indirect effects (F69) |
| TTIP (F13) | production and employment effects (E23) |