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24 sats \ 1 reply \ @SimpleStacker OP 8 Apr \ parent \ on: Pleb Economist #6: Analysis of Trump's Reciprocal Tariff Calculations econ
Agreed. And the equation itself is actually correct, assuming you choose the right parameters, and only for small changes (partial equilibrium.)
I’m not actually doing any math, but I think the formula fits with the Gravity Model, which has trade flows varying inversely with “distance”.
Distance is something like the combined obstacles to trade (no one really knows because it’s usually just estimated as a residual and they don’t give it much thought). So, you’d expect the same proportionality between directional trade flows and directional trade barriers.
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