The first part is referred to the essential components of TTIP. These include the negotiating institutions, the central regulations and the objectives associated with it.
Chapter three forms the core of this essay. In the first part microeconomic effects on selected sectors in the EU and USA are carried out. The used econometric model MIRAGE will be explained and the calculated results are demonstrated. In the second part of chapter three macroeconomic effects are considered, which have been calculated on the basis of the MELITZ model.
The central sources of this chapter are the following studies: “Dimensions and Effects of a Transatlantic Free Trade Agreement between the EU and US. from IFO-institute in Munich.
To address also effects to third countries, as an example two studies related to turkey and china are used.
Chapter 5 gives a summary and check whether the hypothesis of this essay has been proofed.
Table of Contents
1 Introduction
1.1 Topical Issues of the Research
1.2 The purpose and objective of the study
1.3 Main hypothesis and auxiliary hypotheses
1.4 Research Methodology
1.5 Structure of Work
2 The Transatlantic Trade and Investment Partnership
2.1 Background
2.2 The Multilateral Trade Liberalization
2.2.1 General Agreements on Tariffs and Trade (GATT)
2.2.2 World Trade Organization (WTO)
2.2.3 DOHA Development Round
2.3 Negotiating Objects and Integration Motives of TTIP
3 Economic Effects of TTIP
3.1 Microeconomic Effects on Sectors of Economic Activity
3.1.1 Scenario of Selected Sectors
3.1.2 The MIRAGE Model
3.1.2.1 The Demand Side
3.1.2.2 The Supply Side
3.1.2.3 Capital and Investment
3.1.2.4 Agriculture Modelling
3.1.3 Results of the ifo-Study
3.1.3.1 Effects Terms of Trade in Sector
3.1.3.2 Multilateral World-Trade-System and the Rule of Origin
3.1.3.3 Summary of the Microeconomic Effects
3.2 Macroeconomic Effects
3.2.1 The Market Model of Monopolistic Competition
3.2.2 The MELITZ Model
3.2.2.1 Productivity in the Melitz Model
3.2.2.2 Free Market Entry Condition (FE)
3.2.2.3 Zero Cutoff Profit (ZCP)
3.2.2.4 Comparison of Autarky and Free Trade
3.2.2.5 Impact of Trade Liberalization
3.2.3 Simulation Results of the TTIP Study
3.2.3.1 Reallocation Effects
3.2.3.2 Effects on Macroeconomic Variables
3.2.3.3 Effects on Labor Market
3.2.3.4 Summary of the Macroeconomic Effects
3.3 The Role of Standards in TTIP – Three Examples
3.3.1 Chemistry
3.3.2 Agriculture
3.3.3 Data Protection
4 TTIP Effects to Third Countries
4.1 Effects on Turkey Economy
4.1.1 Trade Relations between EU-US and Turkey
4.1.2 Methodology
4.1.3 Empirical Results
4.2 Effects on Chinese Economy
4.2.1 China’s Trade Statistics
4.2.2 Methodology
4.2.3 Empirical Results
4.3 Evaluation the Results
5 Conclusion
5.1 Summary of the Results
5.2 Proof of Hypotheses
5.3 Prospect
Research Objectives and Themes
This research aims to explain and analyze the microeconomic and macroeconomic effects of the Transatlantic Trade and Investment Partnership (TTIP) using established econometric modeling techniques, specifically the MIRAGE and MELITZ models, to demonstrate the potential impacts on the United States, Europe, and selected third countries.
- Application of CGE and gravity models to international trade analysis.
- Evaluation of trade liberalization effects on productivity and labor markets.
- Analysis of the role of non-tariff barriers and regulatory standardization.
- Investigation into the impact of TTIP and TPP on third-party economies like Turkey and China.
- Discussion on the trade-off between economic growth and standards related to sustainability and social responsibility.
Excerpt from the Book
1.1 Topical Issues of the Research
The topical issues of the research depend on economic cooperation between the US and Europe and the resulting effects on economic growth on both sides of the Atlantic. The growth-promoting effects include the withdrawal of trade barriers, standardization in technical, organizational and legal matters and ultimately a political cooperation.
Opinions about TTIP differ widely. From a technical perspective, the question arises: Why must apply in the US and Germany different standards? For the industry, this is a controversial issue. So reports the German automotive industry at March 2nd 2015 in the newspaper about an expenditure of billions EURO per year for unnecessary duplicated work.
The German Chancellor Angela Merkel said at the 150-year anniversary of the BASF, that the chemical company paid 140 million EUR per year in customs duties on exports to the US. Our goal should be that this money could be differently applied, e.g. for research and development. In New York is currently running the 9th round of negotiations between the European Union and the United States to a TTIP reach. The eliminations of tariffs and double standards should generate on both sides of the Atlantic more economic growth.
The CEO of BASF Mr. Kurt Bock did establish that chemistry is a key industry that is highly regulated and very dependent on the political framework. He said: “Our growth will continue to play, especially outside of Europe. As BASF, we want actively shape this change.”
With regard to the current issues, this essay relates to the economic issues.
Summary of Chapters
1 Introduction: Provides an overview of the TTIP negotiations, highlights key points of criticism, and outlines the research objective of evaluating economic effects through econometric modeling.
2 The Transatlantic Trade and Investment Partnership: Discusses the background of the partnership, the context of multilateral trade liberalization (GATT, WTO, DOHA), and the primary integration motives.
3 Economic Effects of TTIP: Analyzes microeconomic impacts on sectors using the MIRAGE model and macroeconomic effects using the MELITZ model, while also examining the role of regulatory standards.
4 TTIP Effects to Third Countries: Evaluates the spill-over effects and potential consequences of TTIP on external economies, specifically focusing on case studies of Turkey and China.
5 Conclusion: Summarizes the study's findings, verifies the initial hypotheses, and provides a prospect regarding the balance between economic benefits and regulatory standards.
Keywords
TTIP, Transatlantic Trade and Investment Partnership, Econometric Models, MIRAGE Model, MELITZ Model, Trade Liberalization, Microeconomic Effects, Macroeconomic Effects, Non-tariff Barriers, GDP, Productivity, Third Countries, Turkey, China, Standards
Frequently Asked Questions
What is the primary focus of this research?
This work examines the economic impacts of the Transatlantic Trade and Investment Partnership (TTIP) by applying specific econometric frameworks to analyze potential changes in growth, trade volume, and sector-specific developments.
Which central thematic fields does the study cover?
The study covers microeconomic and macroeconomic consequences, the role of standardization and non-tariff barriers, and the external trade diversion effects on third countries.
What is the main objective of the paper?
The primary goal is to demonstrate that econometric model calculations are a practicable and scientifically sound method for analyzing the complex effects of the proposed trade agreement.
Which scientific methods are utilized?
The author primarily utilizes the CGE-based MIRAGE model for trade analysis and the MELITZ model for analyzing monopolistic competition, firm heterogeneity, and market entry conditions.
What does the main body of the work address?
The main body focuses on the technical explanation of the MIRAGE and MELITZ models, the presentation of simulation scenarios, and the empirical evaluation of trade effects for the EU, the USA, Turkey, and China.
Which keywords characterize this work?
The core keywords include TTIP, Econometric Models, Trade Liberalization, Non-tariff Barriers, Gross Domestic Product (GDP), and Productivity.
How does the Melitz model differ from Krugman’s theory?
The Melitz model expands upon Krugman’s work by introducing company heterogeneity—accounting for varying productivity levels across firms—and the necessity of fixed market entry costs.
What conclusion does the study reach regarding the inclusion of third countries?
The study concludes that regional agreements like TTIP can have negative spill-over effects on non-participating third countries due to trade diversion, though specific outcomes vary based on individual country trade relations.
- Quote paper
- Uwe Lebefromm (Author), 2015, Microeconomic and Macroeconomic Effects of TTIP (Transatlantic Trade and Investment Partnership), Munich, GRIN Verlag, https://www.grin.com/document/302871
