(May 20, 2016) The ITC Wednesday released its mandated report on the economic effects estimated to result from the TransPacific Partnership. As is usual in standard trade models, the estimated welfare gains may sound small: on the order of ¼ % of income. But that would still be way worth doing. Furthermore the ITC study, by design, leaves out a lot. For example, the Petri-Plummer study from the Peterson Institute estimates income gains from TPP that are twice as large, in part because it takes into account Melitz-style opportunities for more productive firms to expand.
I am quoted twice in the associated press coverage this week. They can be tweetably summarized in one sentence:
(1) US rejection of TPP would signal withdrawal from Asia; (2) US acceptance of Trump would signal withdrawal from the entire world! Continue reading