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Estimating the welfare costs of autarky: A sufficient statistics approach

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  • Esposito, Federico

Abstract

This paper uses the Jeffersonian Embargo enacted in 1807 to estimate the welfare costs of autarky. I use an Armington trade model to compute the welfare losses using two sufficient statistics: the share of expenditures on domestic goods and the elasticity of substitution between domestic and imported goods. I use historical data from 1792 to 1807 to estimate the Armington elasticity, using import tariffs as instrument for relative prices. The empirical findings suggest welfare losses of 2.83–8.14% of real income.

Suggested Citation

  • Esposito, Federico, 2020. "Estimating the welfare costs of autarky: A sufficient statistics approach," Economics Letters, Elsevier, vol. 194(C).
    • Handle: RePEc:eee:ecolet:v:194:y:2020:i:c:s0165176520302305
    DOI: 10.1016/j.econlet.2020.109361
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    Cited by:

    1. Moghaddasi Kelishomi, Ali & Nisticò, Roberto, 2022. "Employment effects of economic sanctions in Iran," World Development, Elsevier, vol. 151(C).
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    3. Ali Moghaddasi Kelishomi & Roberto Nisticò, 2021. "Employment Effects of Economic Sanctions," CSEF Working Papers 615, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    4. Ambec, Stefan & Esposito, Federico & Pacelli, Antonia, 2023. "The economics of carbon leakage mitigation policies," TSE Working Papers 23-1408, Toulouse School of Economics (TSE), revised Sep 2023.

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    More about this item

    Keywords

    Embargo; Welfare costs of autarky; Armington elasticity;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative

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