Ganelli, Giovanni; Tervala, Juha - International Monetary Fund (IMF) - 2015
We revisit the question of the quantitative benefits of WTO trade agreements in a setup that is non-standard from the … traditional trade policy point of view. We show that in a New Keynesian model, unilateral trade liberalization reduces welfare due … to terms-of-trade deterioration, creating an incentive for a trade agreement. For realistic parameter values, the value …