Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/180147 
Year of Publication: 
2016
Series/Report no.: 
BGPE Discussion Paper No. 168
Publisher: 
Friedrich-Alexander-Universität Erlangen-Nürnberg, Bavarian Graduate Program in Economics (BGPE), Nürnberg
Abstract: 
This paper explores the effects of trade liberalization envisioned in a Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union. We use a new quantitative spatial trade model with consumptive and productive uses of land and inputoutput linkages. Our calibration draws mainly on the World Input Output Database (WIOD). The eventual outcome of the negotiations is uncertain. Tariffs in EU-US-trade are already very low, however, so that an agreement will have a major impact only by eliminating non-tariff barriers. These are extremely hard to quantify. We address these uncertainties by considering a corridor of trade liberalization paths and by providing numerous robustness checks. We find that even with ambitious liberalization, real income gains within a TTIP are in the range of up to 0.46% for most countries. The effect on outside countries is often negative, and even smaller. Taking land into account scales down the welfare effects quite strongly. Interestingly, we find that all German counties derive unambiguous welfare gains even though the model allows for negative terms-of-trade effects, in principle. Our analysis also implies that in order to arrive at the same welfare gains as under a TTIP, a multilateral liberalization would have to be much more ambitious for the US than for the EU.
Subjects: 
international trade and trade policy
factor mobility
intermediate inputs
sectoral interrelations
transatlantic trade
TTIP
JEL: 
F11
F16
R12
R13
Document Type: 
Working Paper

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