Gradualism and dynamic trade adjustment: Revisiting the pro-trade effect of free trade agreements

Do pro-trade effects of free trade agreements reflect timing of policy or dynamic trade adjustment? Only the latter involves dynamic welfare gains. I find that dynamic trade adjustment is as important as the immediate impact effect of free trade agreements.

► Pro-trade effects of free trade agreements can reflect timing of policy or dynamic trade adjustment. ► Disentangling these channels is important because only the latter involves a dynamic welfare gain. ► Dynamic trade adjustment is as important as the immediate impact effect of free trade agreements.