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The Gains from Trade in a New Model from the IMF: Still Very Small

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  • David Rosnick

Abstract

This paper takes a careful look at a recent International Monetary Fund (IMF) Working Paper that claims to find significant gains for liberalization of trade through the World Trade Organization. It is not clear that the reported gains are at all large. The IMF paper shows that multilateral liberalization increases consumption perhaps 0.014 percent. This would be about 43 cents per person per month in the United States. One significant result of the IMF paper is that potential gains of multilateral trade liberalization are very small even in a formal New Keynesian model incorporating economies with significant power in international markets.

Suggested Citation

  • David Rosnick, 2015. "The Gains from Trade in a New Model from the IMF: Still Very Small," CEPR Reports and Issue Briefs 2015-10, Center for Economic and Policy Research (CEPR).
    • Handle: RePEc:epo:papers:2015-10
    as

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    File URL: http://www.cepr.net/documents/WTO_trade_liberalization_2015-04.pdf
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    References listed on IDEAS

    as
    1. David Rosnick, 2013. "Gains from Trade? The Net Effect of the Trans-Pacific Partnership Agreement on U.S. Wages," CEPR Reports and Issue Briefs 2013-14, Center for Economic and Policy Research (CEPR).
    2. Ganelli, Giovanni & Tervala, Juha, 2015. "Value of WTO trade agreements in a New Keynesian model," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 347-362.
    3. Ralph Ossa, 2014. "Trade Wars and Trade Talks with Data," American Economic Review, American Economic Association, vol. 104(12), pages 4104-4146, December.
    4. Peter A. Petri & Michael G. Plummer & Fan Zhai, 2012. "The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6642, October.
    5. Petri, Peter A., 2012. "The Trans-Pacific Partnership and Asia-Pacific Integration," 2012: New Rules of Trade? December 2012, San Diego, California 143184, International Agricultural Trade Research Consortium.
    6. Lorenzo Caliendo & Fernando Parro, 2015. "Estimates of the Trade and Welfare Effects of NAFTA," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(1), pages 1-44.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    IMF; WTO; trade; trade liberalization;
    All these keywords.

    JEL classification:

    • F - International Economics
    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F10 - International Economics - - Trade - - - General

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