Value of WTO Trade Agreements in a New Keynesian Model / Giovanni Ganelli, Juha Tervala.

Format:

Book

Government document

Author/Creator:

Ganelli, Giovanni.

Contributor:

Tervala, Juha.

Series:

IMF Working Papers; Working Paper ; No. 2015/037

IMF Working Papers

Language:

English

Subjects (All):

World Trade Organization.

Service industries--Law and legislation.

Service industries.

Intellectual property (International law).

Service industries--Case studies.

Physical Description:

1 online resource (36 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2015.

Summary:

We revisit the question of the quantitative benefits of WTO trade agreements in a setup that is non-standard from the traditional trade policy point of view. We show that in a New Keynesian model, unilateral trade liberalization reduces welfare due to terms-of-trade deterioration, creating an incentive for a trade agreement. For realistic parameter values, the value of an agreement, which cuts tariffs by one percentage point, is 0.5% to 2% of consumption, much larger than in trade models. The intuition for this result hinges on some New Keynesian features of our framework, such as imperfect competition and endogenous labor supply.

Contents:

Cover; Value of WTO Trade Agreements in a New Keynesian Model; I. INTRODUCTION; II. THE MODEL; A. Households; B. The Government; C. Firms; D. The Consolidated Budget Constraint; E. The Initial Steady State; III. PARAMETERIZATION; IV. EFFECTS OF A UNILATERAL TARIFF REDUCTION; V. VALUE OF WTO TRADE AGREEMENTS; VI. CONCLUSIONS; REFERENCES

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on online resource; title from PDF title page (ebrary, viewed April 25, 2015).

ISBN:

9781498350716

1498350712