Welfare impact of a bilateral trade agreement

Deergha Raj Adhikari ()
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Deergha Raj Adhikari: University of Louisiana at Lafayette, Postal: 214 Hebrard Boulevard , Lafayette, LA 70504 U.S.A., http://www.louisiana.edu/

Economia Internazionale / International Economics, 2009, vol. 62, issue 2, 135-143

Abstract: We develop a general equilibrium model and derive sufficient conditions for a trade agreement to be welfare-enhancing for a country. Our sufficient conditions require that the unconditional mean of the real GDP of the domestic country be higher and the unconditional mean of the total real import of the domestic country from the countries outside the trading block be lower following the trade agreement. We apply the model on U.S.-Australia trade agreement. Our results meet the sufficient conditions. Therefore, we conclude that the U.S.-Australia trade agreement has helped enhancing U.S. welfare.

Keywords: NAFTA; Revealed-preference; Trade-reform; Welfare; Intervention-analysis (search for similar items in EconPapers)
JEL-codes: F01 (search for similar items in EconPapers)
Date: 2009
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