The Sources and Magnitudes of Switzerland's Gains from Trade
Christian Hepenstrick ()
Swiss Journal of Economics and Statistics (SJES), 2016, vol. 152, issue I, 1-21
This paper uses the modern workhorse model of quantitative trade theory (Eaton and Kortum, 2002) as a measurement tool to quantify Switzerland's gains from trade. I find that individual trading partners matter surprisingly little for Switzerland's welfare because of reallocation effects: if trade between Switzerland and some partner country is inhibited, other supplier countries step into the breach so that the losses are limited andtypically amount to less than 1%. The conclusions are different if one considers groups of countries such as for example the EU: participating in a multilateral 25% trade cost reduction increases Swiss welfare by 11% relative to the status quo. However, it must also be noted that in the case of non-participation, the actual welfare losses relative to the status quo are modest with less than 1%.
Keywords: gains from trade; Switzerland; development accounting (search for similar items in EconPapers)
JEL-codes: F10 F11 F14 (search for similar items in EconPapers)
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Journal Article: The Sources and Magnitudes of Switzerland’s Gains from Trade (2016)
Working Paper: The sources and magnitudes of Switzerland’s gains from trade (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ses:arsjes:2016-i-1
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