Estimating the welfare costs of autarky: A sufficient statistics approach

Federico Esposito

Economics Letters, 2020, vol. 194, issue C

Abstract: This paper uses the Jeffersonian Embargo enacted in 1807 to estimate the welfare costs of autarky. I use an Armington trade model to compute the welfare losses using two sufficient statistics: the share of expenditures on domestic goods and the elasticity of substitution between domestic and imported goods. I use historical data from 1792 to 1807 to estimate the Armington elasticity, using import tariffs as instrument for relative prices. The empirical findings suggest welfare losses of 2.83–8.14% of real income.

Keywords: Embargo; Welfare costs of autarky; Armington elasticity (search for similar items in EconPapers)
JEL-codes: F11 F14 N70 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (7)

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Working Paper: Estimating the welfare costs of autarky: a sufficient statistics approach (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:194:y:2020:i:c:s0165176520302305

DOI: 10.1016/j.econlet.2020.109361

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