A multi-sector analysis of Switzerland's gains from trade

October 16, 2020
Issue 2020-20


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%.

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JEL classification:
F10, F11, F14
Gains from trade, input-output linkages, free trade agreements

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  • Dr. Laurence Wicht

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