Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/249225 
Year of Publication: 
2021
Series/Report no.: 
Texto para Discussão No. 2709
Publisher: 
Instituto de Pesquisa Econômica Aplicada (IPEA), Brasília
Abstract (Translated): 
We estimate the effects of reductions in trade costs between the four original members of Souther Common Market (Mercado Común del Sur - Mercosur) on regional trade and on the Brazilian labor market, using the model developed by Caliendo, Dvorkin e Parro (2019), which features elements such as labor market frictions and input-output linkages. Two counterfactual scenarios about the evolution of trade costs in Mercosur countries are considered. Results suggest that efforts to reduce trade costs can have starkly different effects on regional trade, depending on its geographic coverage: reductions that are limited to transactions among the four countries leads to a substitution between domestic production and intra-bloc trade, with limited effects on extra-bloc trade flows, while general reductions in trade costs of the four countries also affect trade with extra-Mercosur partners. The effects on Brazilian labor market are also different among scenarios, but small in magnitude in both cases.
Subjects: 
international trade
trade integration
labor market dynamics
general equilibrium
JEL: 
F11
F14
F15
F16
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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