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Trade Economics Department's Lecture

 

Topic:  How Did China's WTO Entry Affect US Prices?

Speaker:  Mi Dai

Time:  14:00 Dec.22 2017

Place:  Room1008,Mingde Bissiness Building

Abstract We analyze the effects of China’s rapid export expansion following WTO entry on U.S. prices, exploiting cross-industry variation in trade liberalization. Lower input tariffs boosted Chinese firms’ productivity, lowered costs, and expanded export participation. We construct two instruments for U.S. prices: one for Chinese export participation; the other for Chinese export prices. Regressing U.S. CES price indexes on these instruments reveals that China’s WTO entry reduced the U.S. manufacturing price index by 7:6 percent between 2000 and 2006. More than two-thirds of the gains come from China reducing its own input tariffs, with additional gains from reduced tariff uncertainty for Chinese exporters.