Trade and welfare effects of a potential free trade agreementbetween Japan and the United States

Walter, Timo

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Walter, Timo

Trade and welfare effects of a potential free trade agreementbetween Japan and the United States

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URN: urn:nbn:de:bsz:100-opus-15045
URL: http://opus.uni-hohenheim.de/volltexte/2018/1504/

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SWD-Schlagwörter:

Japan , USA , Handelsabkommen

Freie Schlagwörter (Englisch):

Trade agreements , Gravity model , Counterfactual equilibrium , Intermediate goods , Input-output linkages , Japan , United States

Institut:

Institut für Volkswirtschaftslehre

DDC-Sachgruppe:

Wirtschaft

Dokumentart:

ResearchPaper

Schriftenreihe:

Hohenheim discussion papers in business, economics and social sciences

Bandnummer:

2018,16

Sprache:

Englisch

Erstellungsjahr:

2018

Publikationsdatum:

13.07.2018

Lizenz:

Veröffentlichungsvertrag mit der Universitätsbibliothek Hohenheim

Kurzfassung auf Englisch:

This paper deals with the trade and welfare effects of a potential bilateral trade agreement between the US and Japan. A possible agreement is currently being discussed between Washington and Tokyo, although, there is also the alternative for the US government joining Trans-Pacific Partnership (TPP). Based on the theoretical model of Caliendo and Parro (2015) I analyse the welfare gains of such a bilateral free trade agreement (FTA) in the style of Aichele et al. (2014). In particular, I simulate three scenarios with different levels of integration: The reduction of tariffs only, the scenario of a shallow FTA, and a deep FTA. In addition, the paper compares the trade and welfare changes of a deep FTA to the welfare effects of TPP. The findings are that Japan has the highest welfare gains with a FTA (0.085%), whilst the United States benefits the most from TPP with a welfare gain of 0.05%.