Welfare Effects of TTIP in a DSGE Model

descriptionPublicationkeyboard_double_arrow_right Article , Book , Other literature type , Research 01 Jan 2016Embargo end date: 01 Sep 2016 English Publisher:Elsevier BVJournal:SSRN Electronic Journal (eissn: 1556-5068,

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Authors: Engler, Philipp; Tervala, Juha;

doi: 10.2139/ssrn.2841193 , 10.1016/j.econmod.2017.11.007 , 10.17169/refubium-23293

handle: 10419/148559 , 10419/145466

Welfare Effects of TTIP in a DSGE Model

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Abstract

Several studies have analyzed the trade and output effects of the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union, but our paper is the first attempt to study its welfare effects. We measure the welfare effect of TTIP as the percentage of initial consumption that households would be willing to pay for TTIP in order to remain as well off with TTIP as without it. The discounted present value of the welfare gain of TTIP, which leads to the elimination of tariffs and cuts in non-tariff measures by 25%, is in the range of 1% to 4% of initial consumption, depending on the parameterization. The welfare gain increases in the elasticity of substitution between domestic and foreign goods. The bulk of the welfare gain is caused by cuts in non-tariff measures.

Related Organizations

German Institute for Economic Research
Germany
University of Helsinki
Finland
Leibniz Association
Germany

Keywords

ddc:330, tariffs, 300 Sozialwissenschaften::330 Wirtschaft::337 Weltwirtschaft, TTIP, trade liberalization, E60, trade agreement, F13, Tariffs, F41

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