3-D Gains from Trade

Doireann Fitzgerald

No 809, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: Static trade models imply modest gains from trade. I quantify the gains from trade in a multi-country dynamic stochastic environment, taking into account the contributions to welfare of trade across states of the world, and over time, as well as trade within dates and states (3-D gains). For developing countries, which have volatile productivity, standard risk aversion implies that 3-D gains from trade are at least twice as big as static gains, even under financial autarky. Because productivity is less volatile for developed countries, their 3-D gains from trade are only modestly bigger than static gains, even under complete markets.

Keywords: Gains from Trade; International risk sharing (search for similar items in EconPapers)
JEL-codes: F11 F41 (search for similar items in EconPapers)
Date: 2024-12-24
New Economics Papers: this item is included in nep-int and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmwp:99350

DOI: 10.21034/wp.809

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