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How Deep is Your Love? A Quantitative Spatial Analysis of the Transatlantic Trade Partnership

Oliver Krebs and Michael Pflüger

No 168, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: This paper explores the effects of trade liberalization envisioned in a Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union. We use a new quantitative spatial trade model with consumptive and productive uses of land and inputoutput linkages. Our calibration draws mainly on the World Input Output Database (WIOD). The eventual outcome of the negotiations is uncertain. Tariffs in EU-US-trade are already very low, however, so that an agreement will have a major impact only by eliminating non-tariff barriers. These are extremely hard to quantify. We address these uncertainties by considering a corridor of trade liberalization paths and by providing numerous robustness checks. We find that even with ambitious liberalization, real income gains within a TTIP are in the range of up to 0.46% for most countries. The effect on outside countries is often negative, and even smaller. Taking land into account scales down the welfare effects quite strongly. Interestingly, we find that all German counties derive unambiguous welfare gains even though the model allows for negative terms-of-trade effects, in principle. Our analysis also implies that in order to arrive at the same welfare gains as under a TTIP, a multilateral liberalization would have to be much more ambitious for the US than for the EU.

Keywords: international trade and trade policy; factor mobility; intermediate inputs; sectoral interrelations; transatlantic trade; TTIP (search for similar items in EconPapers)
JEL-codes: F11 F16 R12 R13 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2016-12
New Economics Papers: this item is included in nep-dcm, nep-geo and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link) ... ade-Partnership-.pdf First version, 2016 (application/pdf)

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Journal Article: How deep is your love? A quantitative spatial analysis of the transatlantic trade partnership (2018) Downloads
Working Paper: How Deep Is Your Love? A Quantitative Spatial Analysis of the Transatlantic Trade Partnership (2015) Downloads
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