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Economic Effects of the USA - China Trade War: CGE Analysis with the GTAP 9.0a Data Base

Author

Listed:
  • Enkhbayar Shagdar

    (Economic Research Institute for Northeast Asia (ERINA))

  • Tomoyoshi Nakajima

    (Economic Research Institute for Northeast Asia (ERINA))

Abstract

An analysis of the economic effects of the ongoing USA-China trade war using the standard CGE Model and GTAP Data Base 9.0a revealed that both parties will be worse-off from this trade friction, having welfare losses and real GDP contractions regardless of international capital mobility status—i.e. whether the capital is internationally mobile or not. Moreover, the results indicated that the negative economic and trade impacts on China would be larger compared to those of the USA. Although, other countries and regions would be better-off having positive changes in their welfare and real GDP, their magnitudes were much lower than losses of the USA and China. Therefore, as a whole, the global economy will be worse-off as a result of this trade war between the world's two largest economies, the USA and China.

Suggested Citation

  • Enkhbayar Shagdar & Tomoyoshi Nakajima, 2018. "Economic Effects of the USA - China Trade War: CGE Analysis with the GTAP 9.0a Data Base," Discussion papers 1806e, ERINA - Economic Research Institute for Northeast Asia.
  • Handle: RePEc:eri:dpaper:1806e
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade policy; CGE models;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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