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Trade Wars and Trade Talks with Data

Listed author(s):
  • Ralph Ossa

How large are optimal tariffs? What tariffs would prevail in a worldwide trade war? How costly would a breakdown of international trade policy cooperation be? And what is the scope for future multilateral trade negotiations? I address these and other questions using a unified framework which nests traditional, new trade, and political economy motives for protection. I find that optimal tariffs average 62 percent, world trade war tariffs average 63 percent, the government welfare losses from a breakdown of international trade policy cooperation average 2.9 percent, and the possible government welfare gains from future multilateral trade negotiations average 0.5 percent. (JEL F12, F13, O19)

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 104 (2014)
Issue (Month): 12 (December)
Pages: 4104-4146

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Handle: RePEc:aea:aecrev:v:104:y:2014:i:12:p:4104-46
Note: DOI: 10.1257/aer.104.12.4104
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