2015年-IMF国际货币组织全球_Value_of_WTO_Trade_Agreements_in_a_New_Keynesian_Model_35页_634kb

Summary of "Value of WTO Trade Agreements in a New Keynesian Model"

Core Content

This working paper by Giovanni Ganelli and Juha Tervala examines the value of WTO trade agreements within a New Keynesian framework, highlighting how these agreements can significantly improve welfare compared to traditional trade models. The paper introduces a two-country model with imperfect competition, price rigidities, and endogenous labor supply, which allows for a more realistic assessment of the economic impacts of trade liberalization.

Main Viewpoints

• Unilateral Trade Liberalization Reduces Welfare: In a New Keynesian model, reducing tariffs unilaterally leads to a deterioration in the terms of trade, which in turn reduces welfare. This is due to the presence of imperfect competition and endogenous labor supply, which are not typically considered in traditional trade models.

• Trade Agreements Provide Substantial Welfare Gains: A trade agreement that reduces tariffs by one percentage point can lead to welfare gains of 0.5% to 2% of consumption, which is much larger than what is typically found in standard trade models. These gains are attributed to the interaction of sticky prices, labor supply elasticity, and the degree of within-country substitutability of goods.

• Key Determinants of Welfare Gains: The welfare gains from trade agreements are highly dependent on:

  • Frisch Elasticity of Labor Supply: Higher elasticity leads to greater welfare gains as households respond more strongly to tariff reductions by increasing labor supply.
  • Within-Country Substitutability: Lower substitutability (i.e., more imperfect competition) increases the welfare gains from trade liberalization because it leads to a larger increase in output and consumption when tariffs are reduced.

Key Information

• Model Characteristics:

  • A two-country New Keynesian model with imperfectly competitive firms and price rigidities.
  • Endogenous labor supply and home bias in consumption.
  • Use of Calvo pricing to model staggered price adjustments.
  • Log-linearization around non-zero tariffs.

• Empirical and Theoretical Context:

  • The paper builds on the terms-of-trade theory and the work of Eaton and Kortum (2002), Caliendo and Parro (2015), and Ossa (2014).
  • It shows that the welfare gains from WTO trade agreements are significantly larger than previously estimated due to the inclusion of New Keynesian features.

• Parameterization:

  • The model assumes symmetric countries with $n = 0.5$.
  • The discount factor $\beta$ is set to 0.99.
  • The inverse of the consumption elasticity of money demand is set to 1.
  • The Frisch elasticity of labor supply ($\nu$) is set to 1, reflecting a more realistic value than the high values typically used in trade models.
  • The within-country substitutability ($\theta$) is set to 11, and cross-country substitutability ($\rho$) to 2.
  • The initial tariff rate ($\tau$) is set to 4%, with a range of 2% to 6%.

• Policy Implication:

  • The results suggest that the completion of the Doha Round should be a high priority, as WTO trade agreements provide substantial welfare benefits.
  • The paper emphasizes that the inclusion of New Keynesian features, such as endogenous labor supply and imperfect competition, is crucial for accurately quantifying the benefits of trade agreements.

Conclusion

By incorporating New Keynesian elements into the analysis of trade agreements, this paper demonstrates that the value of WTO agreements is much higher than previously estimated. The welfare gains from a one percentage point reduction in tariffs are substantial, ranging from 0.5% to 2% of initial consumption, due to the interplay of sticky prices, labor supply responses, and the structure of goods substitutability within countries. This has important implications for trade policy and the evaluation of international trade agreements.