Working Paper: NBER ID: w18113
Authors: Ralph Ossa
Abstract: I show that accounting for cross-industry variation in trade elasticities greatly magnifies the estimated gains from trade. The main idea is as simple as it is general: While imports in the average industry do not matter too much, imports in some industries are critical to the functioning of the economy, so that a complete shutdown of international trade is very costly overall.
Keywords: No keywords provided
JEL Codes: F10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cross-industry variation in trade elasticities (F14) | estimated gains from trade (F17) |
| trade elasticities close to zero (H30) | aggregate elasticity inflated (C43) |
| move from autarky to 2007 levels of trade (F00) | increase real income (E25) |
| multi-industry Armington model (F12) | aggregate trade elasticity (C43) |
| estimated gains from trade (F17) | average 559% among the 50 largest economies (O57) |