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Trade, product variety and welfare: a quantitative assessment for mainland China

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  • Ralf Ruhwedel

    ()

  • Michael Funke

    ()

Abstract

We calculate a variety of welfare gains for Mainland China, following the approach of Romer (1994), who emphasized that proper modelling of the impact of trade restrictions on the number of available product varieties is crucial for quantifying the welfare impact of trade liberalization. The empirical work presented relies on direct measures of product variety calculated from highly disaggregated trade data. The emerging conclusion is that freer trade has indeed boosted welfare.

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File URL: http://www.uni-hamburg.de/fachbereiche-einrichtungen/fb03/iwwt/makro/WPRuhwedel.pdf
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Bibliographic Info

Paper provided by Hamburg University, Department of Economics in its series Quantitative Macroeconomics Working Papers with number 20806.

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Date of creation: Jun 2008
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Handle: RePEc:ham:qmwops:20806

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Keywords: trade liberalization; product variety; welfare; China;

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References

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  1. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
  2. Peter K. Schott, 2008. "The relative sophistication of Chinese exports," Economic Policy, CEPR & CES & MSH, vol. 23, pages 5-49, 01.
  3. Michael Funke, 2000. "Product Variety and Economic Growth - Empirical Evidence for the OECD Countries," IMF Working Papers 00/5, International Monetary Fund.
  4. Robert C. Feenstra & Dorsati Madani & Tzu-Han Yang & Chi-Yuan Liang, 1997. "Testing Endogenous Growth in South Korea and Taiwan," NBER Working Papers 6028, National Bureau of Economic Research, Inc.
  5. Christian Broda & Joshua Greenfield & David Weinstein, 2006. "From Groundnuts to Globalization: A Structural Estimate of Trade and Growth," NBER Working Papers 12512, National Bureau of Economic Research, Inc.
  6. Christian Broda & David W. Weinstein, 2004. "Variety Growth and World Welfare," American Economic Review, American Economic Association, vol. 94(2), pages 139-144, May.
  7. Robert C. Feenstra, 1992. "How Costly Is Protectionism?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 159-178, Summer.
  8. Brambilla, Irene, 2009. "Multinationals, technology, and the introduction of varieties of goods," Journal of International Economics, Elsevier, vol. 79(1), pages 89-101, September.
  9. Richard Harris, 1983. "Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition," Working Papers 524, Queen's University, Department of Economics.
  10. Paul M. Romer, 1994. "New Goods, Old Theory, and the Welfare Costs of Trade Restrictions," NBER Working Papers 4452, National Bureau of Economic Research, Inc.
  11. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  12. Andrea Mangani, 2007. "Measuring Variety and Quality of Products with Trademarks," International Economic Journal, Taylor & Francis Journals, vol. 21(4), pages 613-631.
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Cited by:
  1. Marta Arespa, 2013. "The intensive and the extensive margins: not only an international issue," Portuguese Economic Journal, Springer, vol. 12(1), pages 1-34, April.

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