Lorenzo Caliendo (Yale) will present:

"Tariff Reductions, Entry, and Welfare: Theory and Evidence for the Last Two Decades"

at 12:15pm on Tuesday, March 29, 2016 in (051 Buchanan) Volanakis - TUCK

Lunch will be served at noon.

If you will be attending the Lunch Seminar please RSVP to Richard Reilly at TUCK so he can order the appropriate amount of food.

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Please sign up for a meeting, or dinner at:

https://docs.google.com/spreadsheets/d/1QIjrLXlJAhctTwmf4inAmG9Ur1ThkVIbvCCXjwD8MVk/edit?usp=sharing

Abstract

Tariffs have fallen significantly around the globe over the last two decades. Yet very little is know about the trade, entry, and welfare effects generated by this unprecedented shift in trade policy. We use a heterogeneous-firm quantitative trade model the study the effects of observed changes in trade policy. Importantly, in our model, tariffs affect the entry decision of firms across markets, a channel that has been unduly overlooked in the literature. We first show how trade policy influences entry and selection of firms into markets. We then use a new tariff dataset, and apply a 189-country, 15-sector version of our model, to quantify the trade, entry, and welfare effects of trade liberalization over the period 1990-2010. We find that the impact on firm entry was larger in Advanced relative to Emerging markets; that more than 90% of the gains from trade are a consequence of the reductions in MFN tariffs (the Uruguay Round); that PTAs have not contributed much to the overall gains from trade; and that, with the exception of a few Emerging and Developing countries, most countries do not gain much (and some lose) from a move to complete free trade under zero tariffs.