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Media type:
E-Article
Title:
GAINS FROM TRADE WITH VARIABLE TRADE ELASTICITIES
Contributor:
Brooks, Wyatt J.;
Pujolas, Pau S.
Published:
Wiley Periodicals, Inc., 2019
Published in:
International Economic Review, 60 (2019) 4, Seite 1619-1646
Language:
English
ISSN:
0020-6598;
1468-2354
Origination:
Footnote:
Description:
We measure gains from trade in multisector economies with nonhomothetic preferences where changes in trade costs generate reallocation of expenditure across sectors. We show how to measure the trade elasticity and how it relates to welfare. In this environment, the trade elasticity now varies both across countries and with levels of trade costs. In an application, we find that the trade elasticity varies substantially across countries and that the gains from moving from autarky to observed trade are on average between 24% and 28% greater than in a model where the trade elasticity is constant.