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  5. The US Gains from Trade: Valuation Using the Demand for Foreign Factor Services

The US Gains from Trade: Valuation Using the Demand for Foreign Factor Services

  • Arnaud Costinot
  • Andrés Rodríguez-Clare
Journal of Economic Perspectives
vol. 32, no. 2, Spring 2018
(pp. 3-24)
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Abstract

About eight cents out of every dollar spent in the United States is spent on imports. What if, because of a wall or some other extreme policy intervention, imports were to remain on the other side of the US border? How much would US consumers be willing to pay to prevent this hypothetical policy change from taking place? The answer to this question represents the welfare cost from autarky or, equivalently, the welfare gains from trade. In this article, we discuss how to evaluate these gains using estimates of the demand for foreign factor services.

Citation

Costinot, Arnaud, and Andrés Rodríguez-Clare. 2018. "The US Gains from Trade: Valuation Using the Demand for Foreign Factor Services." Journal of Economic Perspectives, 32 (2): 3-24. DOI: 10.1257/jep.32.2.3

Additional Materials

JEL Classification

  • F11 Neoclassical Models of Trade
  • F13 Trade Policy; International Trade Organizations
  • F14 Empirical Studies of Trade
  • F43 Economic Growth of Open Economies
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