The GATT/WTO Welfare Effects: 1950-2015

Pao-Li Chang (), Wei Jin () and Kefang Yao ()
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Pao-Li Chang: Singapore Management University, Postal: 90 Stamford Road, Singapore 178903
Wei Jin: Nankai University, Postal: Center for Transnationals' Studies and Institute of International Economics, School of Economics, Nankai University, 94 Weijin Road, Tianjin 300071, P.R. China
Kefang Yao: Hunan University, Postal: School of Economics and Trade, Hunan University, 109 Shijiachong Road, Changsha, Hunan Province 410006,, P.R. China

No 4-2022, Economics and Statistics Working Papers from Singapore Management University, School of Economics

Abstract: This paper evaluates the welfare effects of GATT/WTO-induced reductions in tariffs, variable and fixed trade costs, based on identified direct effects of membership indicators on trade flows via nonparametric matching estimations. The identification does not require the use of tariff data, which permits a comprehensive evaluation of the welfare impact of GATT/WTO for a long panel since its inception (1950–2015) of as many as 180 economies. The results indicate substantial (but highly dispersed) welfare gains across members of different development stages and increasing welfare losses of nonmembers in later decades by staying outside the system. An extensive set of robustness checks with respect to model specifications, parameter values, and matching estimations are provided. We also characterize the effects of GATT/WTO on cross-country income disparity, its complementarity with preferential trade agreements, and the welfare impacts of China’s WTO entry on the other economies.

Keywords: matching estimation; quantitative analysis; welfare; fi rm entry; income disparity (search for similar items in EconPapers)
JEL-codes: F13 F14 F17 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2022-04-27
New Economics Papers: this item is included in nep-int and nep-sea
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