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On the heterogeneous welfare gains and losses from trade

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  • Carroll, Daniel R.
  • Hur, Sewon

Abstract

How are the gains and losses from trade distributed across households? We document that tradable goods and services constitute a larger fraction of expenditures for low-wealth and low-income households. Using a trade model with nonhomothetic preferences and uninsurable earnings risk, we measure the differential welfare gains from trade along the income and wealth distribution. A permanent reduction in trade costs that generates the rise in import share of GDP seen in the data from 2001 to 2014 leads to 57% larger welfare gains for households in the lowest wealth decile relative to those in the highest wealth decile.

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  • Carroll, Daniel R. & Hur, Sewon, 2020. "On the heterogeneous welfare gains and losses from trade," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 1-16.
  • Handle: RePEc:eee:moneco:v:109:y:2020:i:c:p:1-16
    DOI: 10.1016/j.jmoneco.2019.10.009
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. On the Heterogeneous Welfare Gains and Losses from Trade
      by Christian Zimmermann in NEP-DGE blog on 2019-11-15 02:09:41

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    Cited by:

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    2. David Kohn & Fernando Leibovici & Michal Szkup, 2019. "Financial Development and Trade Liberalization," 2019 Meeting Papers 1212, Society for Economic Dynamics.
    3. Xavier Jaravel & Erick Sager, 2019. "What are the price effects of trade? Evidence from the US and implications for quantitative trade models," CEP Discussion Papers dp1642, Centre for Economic Performance, LSE.
    4. Handbury, Jessie, 2020. "Comment on “On the Heterogeneous Welfare Gains and Losses from Trade” by Daniel Carroll and Sewon Hur," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 17-19.
    5. Daniel R. Carroll & Sewon Hur, 2020. "On the Distributional Effects of International Tariffs," Working Papers 20-18, Federal Reserve Bank of Cleveland.
    6. Ma, Yong & Chen, Diandian, 2020. "Openness, rural-urban inequality, and happiness in China," Economic Systems, Elsevier, vol. 44(4).
    7. Hottman, Colin J. & Monarch, Ryan, 2020. "A matter of taste: Estimating import price inflation across U.S. income groups," Journal of International Economics, Elsevier, vol. 127(C).
    8. Faria-e-Castro, Miguel, 2021. "Fiscal policy during a pandemic," Journal of Economic Dynamics and Control, Elsevier, vol. 125(C).
    9. Jaravel, Xavier & Sager, Erick, 2019. "What are the price effects of trade? Evidence from the US for quantitative trade models," LSE Research Online Documents on Economics 103402, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    Trade gains; Inequality; Consumption;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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