Template-type: ReDIF-Paper 1.0
Author-Name: Dr. Laurence Wicht
Author-Name-First: Laurence
Author-Name-Last: Wicht
Author-Person: pwi459
Title: A multi-sector analysis of Switzerland's gains from trade
Abstract: This paper quantifies Switzerland's gains from trade using a multi-country multi-sector general equilibrium Ricardian trade model. The model calibration relies on a novel data source on sectoral linkages to provide a Switzerland-centric analysis. I find that using this novel dataset generates 13.4% higher estimates of the gains from trade for Switzerland, as other data sources tend to underestimate Swiss sectors' exposure to foreign markets. Using this quantitative framework, I then perform a policy-oriented counterfactual analysis to assess the gains from Switzerland's trade integration. I find that Switzerland's wide free trade agreement (FTA) network is associated with small real GDP gains but significantly shapes trade flows. Without Switzerland's FTA network, Swiss real exports decline by -6.9%, while imports decline by -7.6%. An FTA with the US raises real GDP in Switzerland and in the US, albeit only slightly, while CH-US real bilateral trade increases by approximately +7%.
Length: 49 pages
Creation-Date: 2020
Contact-Email: forschung@snb.ch
File-URL: https://www.snb.ch/en/publications/research/working-papers/2020/working_paper_2020_20
File-Format: text/html
Number: 2020-20
Classification-JEL: F10, F11, F14
Keywords: Gains from trade, input-output linkages, free trade agreements
Handle: RePEc:snb:snbwpa:2020-20