Why is Trade Not Free? A Revealed Preference Approach

Rodrigo Adão (), Arnaud Costinot, Dave Donaldson () and John Sturm ()
Additional contact information
Rodrigo Adão: https://www.chicagobooth.edu/faculty/directory/a/rodrigo-adao
Dave Donaldson: https://economics.mit.edu/people/faculty/dave-donaldson
John Sturm: https://jrc.princeton.edu/people/sturm-becko

No 89, Opportunity and Inclusive Growth Institute Working Papers from Federal Reserve Bank of Minneapolis

Abstract: A prominent explanation for why trade is not free is politicians’ desire to protect some of their constituents at the expense of others. In this paper we develop a methodology that can be used to reveal the welfare weights that a nation’s import tariffs implicitly place on different groups of society. Applied in the context of the United States in 2017, this method implies that redistributive trade protection accounts for a significant fraction of US tariff variation and causes large monetary transfers between US individuals, mostly driven by differences in welfare weights across sectors of employment. Perhaps surprisingly, differences in welfare weights across US states play a much smaller role.

Keywords: International trade; Trade policy; Political economy (search for similar items in EconPapers)
JEL-codes: D60 D70 F00 F10 (search for similar items in EconPapers)
Date: 2024-05-20
New Economics Papers: this item is included in nep-int
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Related works:
Working Paper: Why is Trade Not Free? A Revealed Preference Approach (2023)
Working Paper: Why is Trade Not Free? A Revealed Preference Approach (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmoi:98573

DOI: 10.21034/iwp.89

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