Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/180364 
Authors: 
Year of Publication: 
2018
Series/Report no.: 
Hohenheim Discussion Papers in Business, Economics and Social Sciences No. 16-2018
Publisher: 
Universität Hohenheim, Fakultät Wirtschafts- und Sozialwissenschaften, Stuttgart
Abstract: 
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%.
Subjects: 
Trade agreements
Gravity model
Counterfactual equilibrium
Intermediate goods
Input-output linkages
Japan
United States
JEL: 
F13
F14
F17
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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