NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Accounting for the New Gains from Trade Liberalization

Chang-Tai Hsieh, Nicholas Li, Ralph Ossa, Mu-Jeung Yang

NBER Working Paper No. 22069
Issued in March 2016, Revised in October 2016
NBER Program(s):EFG, ITI, PR

We measure the "new" gains from trade reaped by Canada as a result of the Canada-US Free Trade Agreement (CUSFTA). We think of the "new" gains from trade of a country as all welfare e¤ects pertaining to changes in the set of firms serving that country as emphasized in the so-called "new" trade literature. To this end, we first develop an exact decomposition of the gains from trade which separates "traditional" and "new" gains. We then apply this decomposition using Canadian and US micro data and find that the "new" welfare effects of CUSFTA on Canada were negative.

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Document Object Identifier (DOI): 10.3386/w22069

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