We revisit the question of the quantitative benefits of WTO trade agreements in a setup that is non-standard from the traditional trade policy point of view. We show that in a New Keynesian model, unilateral trade liberalization reduces welfare due to terms-of-trade deterioration, creating an incent...

Full description

Bibliographic Details

Main Author:	Ganelli, Giovanni (Author)
Format:	Electronic eBook
Language:	English
Published:	Washington, D.C. International Monetary Fund © 2015
Series:	IMF working paper no. 15/37
Subjects:	World Trade Organization Commercial treaties / Econometric models Terms of trade / Econometric models Free trade / Econometric models Tariff / Econometric models Labor supply / Econometric models Electronic books
Online Access:	Volltext
Summary:	We revisit the question of the quantitative benefits of WTO trade agreements in a setup that is non-standard from the traditional trade policy point of view. We show that in a New Keynesian model, unilateral trade liberalization reduces welfare due to terms-of-trade deterioration, creating an incentive for a trade agreement. For realistic parameter values, the value of an agreement, which cuts tariffs by one percentage point, is 0.5% to 2% of consumption, much larger than in trade models. The intuition for this result hinges on some New Keynesian features of our framework, such as imperfect competition and endogenous labor supply
Item Description:	"February 2015." "Asia and Pacific Department."
Physical Description:	1 Online-Ressource (35 Seiten) Illustrationen
ISBN:	1498388442 9781498388443