Working Paper: CEPR ID: DP12788
Authors: Arnaud Costinot; Andres Rodriguez-Clare
Abstract: About 8 cents out of every dollar spent in the United States is spent on imports. What if, because of a wall or some other extreme policy intervention, imports were to remain on the other side of the US border? How much would US consumers be willing to pay to prevent this hypothetical policy change from taking place? The answer to this question represents the welfare cost from autarky or, equivalently, the welfare gains from trade. In this article, we discuss how to evaluate these gains using the demand for foreign factor services. The estimates of gains from trade for the US economy that we review range from 2 to 8 percent of GDP.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| welfare gains from trade (F10) | demand for foreign factor services (F29) |
| absence of foreign factor services under autarky (F00) | welfare cost on consumers (D69) |
| autarky (F00) | demand for foreign factor services becomes less elastic (F29) |
| elasticity of demand for foreign factor services (F16) | welfare gains from trade (F10) |
| scale of imports (F10) | demand for foreign factor services (F29) |