Working Paper: NBER ID: w8692
Authors: Douglas A. Irwin
Abstract: The United States came close to complete autarky in 1808 as a result of a self-imposed embargo on international shipping from December 1807 to March 1809. Monthly prices of exported and imported goods reveal the embargo's striking effect on commodity markets and allow a calculation of its welfare effects. A simple general equilibrium calculation suggests that the embargo cost about 8 percent of America's 1807 GNP, at a time when the trade share was about 13 percent (domestic exports and shipping earnings). The welfare cost was lower than the trade share because the embargo did not completely eliminate trade and because domestic producers successfully shifted production toward previously imported manufactured goods.
Keywords: No keywords provided
JEL Codes: F1; N7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| military conflicts between Britain and France (D74) | confounding factor in welfare cost analysis (J32) |
| Jeffersonian trade embargo (F10) | welfare cost of about 8% of America's 1807 GNP (I30) |
| Jeffersonian trade embargo (F10) | commodity prices (driving down prices of exported goods by approximately 27%) (F69) |
| Jeffersonian trade embargo (F10) | commodity prices (increasing prices of imported goods by about 33%) (F69) |
| Jeffersonian trade embargo (F10) | adjustments made by domestic producers (shifting production toward previously imported goods) (F14) |