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The Trans-Pacific Partnership – a mega trade deal covering 12 countries that together account for more than one-third of global GDP and a quarter of world exports – is the latest battleground in the decades-long confrontation between proponents and opponents of trade agreements. As usual, the pact's advocates have marshaled quantitative models that make the agreement look like a no-brainer. There is no disagreement between the models on the trade effects.The Petri-Plummer model is squarely rooted in decades of academic trade modeling, which makes a sharp distinction between microeconomic effects (shaping resource allocation across sectors) and macroeconomic effects (related to overall levels of demand and employment).Economists tend to analyze trade agreements in such terms, rendering the Petri-Plummer model more congenial to them. Critics of trade agreements have marshaled countless anecdotes about the adverse effects of imports on wages and employment in affected communities.Economists do not fully understand why expanded trade has produced the negative consequences for wages and employment that it has.
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