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ResearchPaper
2018

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

Abstract (English)

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%.

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Publication series

Hohenheim discussion papers in business, economics and social sciences; 2018,16

Published in

Faculty
Faculty of Business, Economics and Social Sciences
Institute
Institute of Economics

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ISBN

Language
English

Publisher

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Classification (DDC)
330 Economics

Original object

Free keywords

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

Standardized keywords (GND)

Japan USA Handelsabkommen

BibTeX

@techreport{Walter2018, url = {https://hohpublica.uni-hohenheim.de/handle/123456789/6286}, author = {Walter, Timo}, title = {Trade and welfare effects of a potential free trade agreementbetween Japan and the United States}, year = {2018}, school = {Universität Hohenheim}, series = {Hohenheim discussion papers in business, economics and social sciences}, }