International Trade, Trade Policy, and the WTO

This dissertation comprises three papers that study the welfare impact of GATT/WTO, the effects of preference bias on trade flows and welfare, and the optimal trade policy with strategic interactions under a Ricardian model.The first chapter provides a comprehensive evaluation of the welfare impact of GATT/WTO in its entire history of 1950-2015 for 180 countries. The analysis embeds nonparametric matching methods in structural quantitative simulations. The results indicate substantial (but highly heterogeneous) welfare gains created by GATT/WTO at the global level and across more than six decades of its history. The second chapter estimates the effects of bilateral and time-varying preference bias on trade flows and welfare. We use a unique dataset from the BBC World Opinion Poll and identify the effects on bilateral preference parameters due to shifts in these country image perceptions, and quantify their general equilibrium effects on bilateral exports and welfare. The third chapter incorporates strategic interactions into a canonical Ricardian model where two countries choose their optimal trade taxes. We show that in a Nash equilibrium, a country's optimal import tariffs are zero, whereas the optimal export taxes are weakly increasing with respect to its comparative advantage.