Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/306651 
Authors: 
Year of Publication: 
2022
Citation: 
[Journal:] Review of World Economics [ISSN:] 1610-2886 [Volume:] 158 [Issue:] 4 [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2022 [Pages:] 1199-1230
Publisher: 
Springer, Berlin, Heidelberg
Abstract: 
This paper addresses the trade and welfare implications of a bilateral trade agreement between the U.S. and Japan. In 2019, the two countries signed a "stage one" trade agreement, with the U.S.-Japan Trade Agreement (USJTA) and the U.S.-Japan Digital Trade Agreement as two small trade agreements. A comprehensive bilateral free trade agreement (FTA) is currently under discussion between Washington and Tokyo, with the U.S. government alternatively joining the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP). Based on the theoretical model of Caliendo and Parro (Rev Econ Stud, 82(1):1–44, 2015) , I analyze the welfare gains of such a bilateral FTA in the style of Aichele et al. (Where is the value added? China's WTO entry, trade and value chains, ZBW-Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz, 2014). I simulate trade and welfare impacts for the USJTA and the U.S.-Japan Digital Trade Agreement, as well as for a deep bilateral FTA. In addition, I examine and compare the welfare implications of the established CPTPP with the scenario of the U.S. or China joining CPTPP. My findings show that Japan's welfare increases by 0.3% and U.S. welfare increases by 0.14% as a result of the FTA. Welfare of both countries would increase if the U.S. entered CPTPP, with Japanese welfare being even higher if China acceded to CPTPP.
Subjects: 
New quantitative trade model
Trade policy
Free trade agreement
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
JEL: 
F13
F14
F17
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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