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

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  • Arnaud Costinot
  • Andrés Rodríguez-Clare

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.

Suggested Citation

  • Arnaud Costinot & Andrés Rodríguez-Clare, 2018. "The US Gains from Trade: Valuation Using the Demand for Foreign Factor Services," NBER Working Papers 24407, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24407
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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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