Showing papers by "Robert C. Feenstra published in 2021"
TL;DR: In this paper, the authors show that the most efficient way for China to increase its imports from the United States is to mimic the effect of an import subsidy, and that this trade diversion is especially strong for Australia and Canada, followed by Brazil, Indonesia, Malaysia, Thailand, and Vietnam.
Abstract: In December 2019, the United States and China reached a Phase One trade agreement, under which China committed to purchase more imports from the United States: $125 billion more agricultural imports in 2020 and $195 billion more in 2021, as compared to 2017 We show that the most efficient way for China to increase its imports from the United States is to mimic the effect of an import subsidy If China’s agricultural imports did not otherwise grow from their 2017 values, then the subsidies would need to be 42% and 59% to meet the 2020 and 2021 targets, respectively These effective subsidies mean that China would divert agricultural imports away from other countries We find that this trade diversion is especially strong for Australia and Canada, followed by Brazil, Indonesia, Malaysia, Thailand, and Vietnam
9 citations
TL;DR: In this paper, the optimal uniform tariff in a small-country, heterogeneous-firm model with roundabout production and a nontraded good is derived, and the median optimal tariff is 10%, and negative for five countries, as compared to 27% in manufacturing from the one-sector, optimal tariff formula without roundabout manufacturing.
Abstract: We derive a new formula for the optimal uniform tariff in a small-country, heterogeneous-firm model with roundabout production and a nontraded good. Tariffs are applied on imported intermediate inputs. First-best policy requires that markups on domestic intermediate inputs are offset by subsidies. In a second-best setting where such subsidies are not used, the double- marginalization of domestic markups creates a strong incentive to lower the optimal tariff on imported inputs. In a 186-country quantitative model, the median optimal tariff is 10%, and negative for five countries, as compared to 27% in manufacturing from the one-sector, optimal tariff formula without roundabout production.
8 citations
TL;DR: The authors used the structure of the Melitz (2003) model to compare the cost of living and welfare across countries, while incorporating product variety measured by the count of barcodes or firms, and compared welfare relative to the United States to conventional measures of real consumption.
Abstract: We use the structure of the Melitz (2003) model to compare the cost of living and welfare across countries, while incorporating product variety measured by the count of barcodes or firms. For 47 countries, we compare welfare relative to the United States to conventional measures of real consumption. Relative welfare is similar to or higher than that indicated by real consumption for a select group of nations in Europe and some large countries like China and Russia, but lower in most other countries. This qualitative pattern has some similarities to that found in Jones and Klenow (2016), but for very different reasons.
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4 citations