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Welfare impact of a bilateral trade agreement

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  • Adhikari, Deergha Raj

    ()
    (University of Louisiana at Lafayette)

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    Abstract

    We develop a general equilibrium model and derive sufficient conditions for a trade agreement to be welfare-enhancing for a country. Our sufficient conditions require that the unconditional mean of the real GDP of the domestic country be higher and the unconditional mean of the total real import of the domestic country from the countries outside the trading block be lower following the trade agreement. We apply the model on U.S.-Australia trade agreement. Our results meet the sufficient conditions. Therefore, we conclude that the U.S.-Australia trade agreement has helped enhancing U.S. welfare.

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    Bibliographic Info

    Article provided by Camera di Commercio di Genova in its journal Economia Internazionale / International Economics.

    Volume (Year): 62 (2009)
    Issue (Month): 2 ()
    Pages: 135-143

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    Handle: RePEc:ris:ecoint:0006

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    Related research

    Keywords: NAFTA; Revealed-preference; Trade-reform; Welfare; Intervention-analysis;

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    1. repec:fth:coluec:9596-04 is not listed on IDEAS
    2. Jiandong Ju & Kala Krishna, 1996. "Market Access and Welfare Effects of Free Trade Areas without Rules of Origin," NBER Working Papers 5480, National Bureau of Economic Research, Inc.
    3. Lopez, Ramon & Panagariya, Arvind, 1992. "On the Theory of Piecemeal Tariff Reform: The Case of Pure Imported Intermediate Inputs," American Economic Review, American Economic Association, vol. 82(3), pages 615-25, June.
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