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The Sources and Magnitudes of Switzerland’s Gains from Trade

Christian Hepenstrick ()

Swiss Journal of Economics and Statistics, 2016, vol. 152, issue 1, 1-21

Abstract: Summary 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 and typically 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: F10; F11; F14; Gains from trade; Switzerland; development accounting (search for similar items in EconPapers)
Date: 2016
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Journal Article: The Sources and Magnitudes of Switzerland's Gains from Trade (2016) Downloads
Working Paper: The sources and magnitudes of Switzerland’s gains from trade (2011) Downloads
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DOI: 10.1007/BF03399420

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