A multi-sector analysis of Switzerland's gains from trade

Laurence Wicht

No 2020-20, Working Papers from Swiss National Bank

Abstract: This paper quantifies Switzerland's gains from trade using a multi-country multi-sector general equilibrium Ricardian trade model. The model calibration relies on a novel data source on sectoral linkages to provide a Switzerland-centric analysis. I find that using this novel dataset generates 13.4% higher estimates of the gains from trade for Switzerland, as other data sources tend to underestimate Swiss sectors' exposure to foreign markets. Using this quantitative framework, I then perform a policy-oriented counterfactual analysis to assess the gains from Switzerland's trade integration. I find that Switzerland's wide free trade agreement (FTA) network is associated with small real GDP gains but significantly shapes trade flows. Without Switzerland's FTA network, Swiss real exports decline by -6.9%, while imports decline by -7.6%. An FTA with the US raises real GDP in Switzerland and in the US, albeit only slightly, while CH-US real bilateral trade increases by approximately +7%.

Keywords: Gains from trade; input-output linkages; free trade agreements (search for similar items in EconPapers)
JEL-codes: F10 F11 F14 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2020
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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