Investment Responses to Trade Liberalization: Evidence from U.S. Industries and Establishments

Justin Pierce and Peter Schott

No 2017-120, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper examines the effect of a change in U.S. trade policy on the domestic investment of U.S. manufacturers. Using a difference-in-differences identification strategy, we find that industries more exposed to reductions in import tariff uncertainty exhibit relative declines in investment after the change in trade policy. Within industries, we find that this relationship is concentrated among establishments with low initial levels of labor productivity, capital intensity and skill intensity. For plants with high initial levels of skill intensity, we find that increased exposure is associated with a relative increase in investment. We also find evidence that establishments' investment activity is smoother following the policy change.

Keywords: Investment; Normal trade relations; Manufacturing; Most favored nation; China; Trade policy (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 F16 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2017-12-15
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.federalreserve.gov/econres/feds/files/2017120pap.pdf (application/pdf)

Related works:
Journal Article: Investment responses to trade liberalization: Evidence from U.S. industries and establishments (2018)
Chapter: Investment Responses to Trade Liberalization: Evidence from US Industries and Establishments (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2017-120

DOI: 10.17016/FEDS.2017.120

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().