Why Trade Matters After All
NBER Working Paper No. 18113
I show that accounting for cross-industry variation in trade elasticities greatly magnifies the estimated gains from trade. The main idea is as simple as it is general: While imports in the average industry do not matter too much, imports in some industries are critical to the functioning of the economy, so that a complete shutdown of international trade is very costly overall.
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Document Object Identifier (DOI): 10.3386/w18113
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