Measured Gains from International Trade

Javier Cravino and Ariel Burstein
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Ariel Burstein: UCLA

No 738, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: We study the implications of trade liberalizations on real GDP and real consumption in a widely-used class of models in international trade. We calculate the change in aggregate quantities in response to a reduction in international trade costs, following as closely as possible the procedures used by statistical agencies in the US. Real GDP rises in response to a reduction in variable trade costs if measured producer price indices partly capture the decline in trade costs. The change in measured real consumption from a change in trade costs coincides, up to a first-order approximation, with the change in welfare of the representative consumer.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:738

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