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The US Gains From Trade: Valuation Using the Demand for Foreign Factor Services

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  • Costinot, Arnaud
  • Rodríguez-Clare, Andres

Abstract

About 8 cents out of every dollar spent in the United States is spent on imports. What if, because of a wall or some other extreme policy intervention, imports were to remain on the other side of the US border? How much would US consumers be willing to pay to prevent this hypothetical policy change from taking place? The answer to this question represents the welfare cost from autarky or, equivalently, the welfare gains from trade. In this article, we discuss how to evaluate these gains using the demand for foreign factor services. The estimates of gains from trade for the US economy that we review range from 2 to 8 percent of GDP.

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  • Costinot, Arnaud & Rodríguez-Clare, Andres, 2018. "The US Gains From Trade: Valuation Using the Demand for Foreign Factor Services," CEPR Discussion Papers 12788, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12788
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    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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