I agree with several points here. In particular, quantifying GT requires very strong assumptions, and one can tweak some of them to get larger estimates. But deviating from the Pareto assumption in the Melitz model, or allowing for variable markups doesn't seem to do the trick. Moving from Pareto to Lognormal in the Melitz model makes the model better line up with the data, but does not change the implications about GT. An easier route to higher GT is to allow for goods with low demand and supply elasticities, for example fossil fuels. This makes GT significantly higher for countries that rely on imported fossil fuels -- GT become infinite for countries that rely entirely on imported fossil fuels.
1. Trade could reduce the risk of war and global conflict, which means a boost to global GDP, because war is costly.
2. If America trades with India, we make India richer. When India gets richer, it gets more innovative, and those innovations can be brought back to America to make America richer. This creates an innovative feedback loop between making India richer and making America richer which I am not sure these studies are capturing.
3. Trade reduces risk because if something cataclysmic happens (natural disaster, war, political instability, disease) then you have redundancy in the global economy. The reduction of risk increases overall investment and liquidity. In a no-trade environment, wealth is going to be redirected more toward "safe" investments, which means less research, development, and innovation.
I also want to comment that I really enjoyed listening to you explain this to Richard, and if I had not heard/watched you explain it, I would not have understood this article as well. When you explained the Pareto distribution to Richard, I think you used your hands to visually signify cutting off the tail, which helped me understand. Here you use more technical language that I would not have understood without a prior introduction. I don't know if that means you should do more podcasting or put more visual elements in your posts, but that's my personal feedback. I'm not an economist so I need training wheels.
you want to know when it’s time to kill Maga people….Right now Asshole….get your gun and come on over…and see how quik i put a commi Libtard piece of shit like you in its grave
Another area of excess cost of trade restriction is that tariffs are never uniform as the average goes up not only do the costs rise with the square of the rate, but variance increases. And variance can generate astronomical values (positive and negative) to value added.
The level of econ ineptude on Twitter by the admin is something else, Oren Cass or whatever did not know comparative advantage could cause trade imbalance.
I agree with several points here. In particular, quantifying GT requires very strong assumptions, and one can tweak some of them to get larger estimates. But deviating from the Pareto assumption in the Melitz model, or allowing for variable markups doesn't seem to do the trick. Moving from Pareto to Lognormal in the Melitz model makes the model better line up with the data, but does not change the implications about GT. An easier route to higher GT is to allow for goods with low demand and supply elasticities, for example fossil fuels. This makes GT significantly higher for countries that rely on imported fossil fuels -- GT become infinite for countries that rely entirely on imported fossil fuels.
Some things I would add/restate in my own words:
1. Trade could reduce the risk of war and global conflict, which means a boost to global GDP, because war is costly.
2. If America trades with India, we make India richer. When India gets richer, it gets more innovative, and those innovations can be brought back to America to make America richer. This creates an innovative feedback loop between making India richer and making America richer which I am not sure these studies are capturing.
3. Trade reduces risk because if something cataclysmic happens (natural disaster, war, political instability, disease) then you have redundancy in the global economy. The reduction of risk increases overall investment and liquidity. In a no-trade environment, wealth is going to be redirected more toward "safe" investments, which means less research, development, and innovation.
I also want to comment that I really enjoyed listening to you explain this to Richard, and if I had not heard/watched you explain it, I would not have understood this article as well. When you explained the Pareto distribution to Richard, I think you used your hands to visually signify cutting off the tail, which helped me understand. Here you use more technical language that I would not have understood without a prior introduction. I don't know if that means you should do more podcasting or put more visual elements in your posts, but that's my personal feedback. I'm not an economist so I need training wheels.
you want to know when it’s time to kill Maga people….Right now Asshole….get your gun and come on over…and see how quik i put a commi Libtard piece of shit like you in its grave
Nicholas doesn't own a gun, which you would know if you'd watched his podcast
Another area of excess cost of trade restriction is that tariffs are never uniform as the average goes up not only do the costs rise with the square of the rate, but variance increases. And variance can generate astronomical values (positive and negative) to value added.
The level of econ ineptude on Twitter by the admin is something else, Oren Cass or whatever did not know comparative advantage could cause trade imbalance.