Estimating the welfare costs of autarky: a sufficient statistics approach

Esposito, Federico (2020): Estimating the welfare costs of autarky: a sufficient statistics approach.

Abstract

This paper uses the Jeffersonian Embargo enacted in 1807 to estimate the welfare costs of autarky. I use an Armington trade model to compute the welfare losses using two sufficient statistics: the share of expenditures on domestic goods and the elasticity of substitution between domestic and imported goods. I use historical data from 1792 to 1807 to estimate the Armington elasticity, using import tariffs as instrument for relative prices. The empirical findings suggest welfare losses of 2.83-8.14% of real income.

• Item Type: MPRA Paper
• Language: English
• Keywords: Autarky; welfare gains from trade; Jeffersonian Embargo; Armington elasticity
• Subjects: F - International Economics > F0 - General > F00 - General; N - Economic History > N0 - General; N - Economic History > N0 - General > N00 - General; N - Economic History > N7 - Transport, Trade, Energy, Technology, and Other Services; N - Economic History > N7 - Transport, Trade, Energy, Technology, and Other Services > N71 - U.S. ; Canada: Pre-1913

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