Advertisement

Swiss Journal of Economics and Statistics

, Volume 152, Issue 1, pp 1–21 | Cite as

The Sources and Magnitudes of Switzerland’s Gains from Trade

  • Christian Hepenstrick
Open Access
Article

Summary

This paper uses the modern workhorse model of quantitative trade theory (Eaton and Kortum, 2002) as a measurement tool to quantify Switzerland’s gains from trade. I find that individual trading partners matter surprisingly little for Switzerland’s welfare because of reallocation effects: if trade between Switzerland and some partner country is inhibited, other supplier countries step into the breach so that the losses are limited and typically amount to less than 1 %. The conclusions are different if one considers groups of countries such as for example the EU: participating in a multilateral 25 % trade cost reduction increases Swiss welfare by 11 % relative to the status quo. However, it must also be noted that in the case of non-participation, the actual welfare losses relative to the status quo are modest with less than 1 %.

Keywords

Gains from trade Switzerland development accounting 

JEL-Classification

F10 F11 F14 

References

  1. Alvarez, Fernando, and Robert E. Lucas (2007), “General Equilibrium Analysis of the Eaton-Kortum Model of International Trade”, Journal of Monetary Economics, 54(6), pp. 1726–1768.CrossRefGoogle Scholar
  2. Anderson, James E., and Eric Van Wincoop (2004), “Trade Costs”, Journal of Economic Literature, 42(3), pp. 691–751.CrossRefGoogle Scholar
  3. Arkolakis, Costas, Arnaud Costinot, and A Rodriguez-Clare (2012), “New Trade Models, Same Old Gains?”.Google Scholar
  4. Barro, Robert J., and Jong Wha Lee (2001), “International Data on Educational Attainment: Updates and Implications”, Oxford Economic Papers, 53(3), pp. 541–563.CrossRefGoogle Scholar
  5. Caselli, Francesco (2005), “Accounting for Cross-Country Income Differences”, in Handbook of Economic Growth, P. Aghion and F. Durlauf, eds., pp. 679–741, Elsevier.Google Scholar
  6. CEPII (2006), CEPII Databases — Distances, Centre d’Etudes Prospectives et d’Informations Internationales.Google Scholar
  7. Eaton, Jonathan, and Samuel Kortum (2002), “Technology, Geography, and Trade”, Econometrica, 70(5), pp. 1741–1779.CrossRefGoogle Scholar
  8. Eaton, Jonathan, and Samuel Kortum (2010), “Technology in the Global Economy: A Framework for Quantitiative Analysis”, mimeo.Google Scholar
  9. Eaton, Jonathan, and Samuel Kortum (2012), “Putting Ricardo to Work”, Journal of Economic Perspectives, 26(2), pp. 65–90.CrossRefGoogle Scholar
  10. Eaton, Jonathan, Samuel Kortum, and Francis Kramarz (2004), “Dissecting Trade: Firms, Industries, and Export Destinations”, American Economic Review, 94(2), pp. 150–154.CrossRefGoogle Scholar
  11. Egger, Peter, Martin Gassebner, and Andrea Lassmann (2009), “Armington Product Variety Growth in Small Versus Large Countries”, Swiss Journal of Economics and Statistics, 145(4), pp. 411–419.CrossRefGoogle Scholar
  12. Feenstra, Robert C. (1994), “New Product Varieties and the Measurement of International Prices”, American Economic Review, 84(1), pp. 157–177.Google Scholar
  13. Gaulier, Guillaume, Ssoledad Zignago, Dieudonn Sondjo, Adja Sissoko, and Rodrigo Paillacar (2010), “BACI: A World Database of International Trade at the Product-Level, 1995–2007 Version”, Centre d’Etudes Prospectives et d’Informations Internationales Working Paper No. 2010-23.Google Scholar
  14. Mohler, Lukas (2011), “Variety Gains from Trade in Switzerland”, Swiss Journal of Economics and Statistics, 147(1), pp. 45–70.CrossRefGoogle Scholar
  15. UNIDO (2003), Industrial Statistics Database, United Nations Industrial Development Organization.Google Scholar
  16. Waugh, Michael E. (2010), “International Trade and Income Differences”, American Economic Review, 100(5), pp. 2093–2124.CrossRefGoogle Scholar
  17. World Bank (2010), World Development Indicators, World Bank.Google Scholar

Copyright information

© Swiss Society of Economics and Statistics 2016

Authors and Affiliations

  1. 1.Swiss National BankZurichSwitzerland

Personalised recommendations