Self-Harming Trade Policy? Protectionism and Production Networks

Alessandro Barattieri and Matteo Cacciatore

American Economic Journal: Macroeconomics, 2023, vol. 15, issue 2, 97-128

Abstract: Using monthly data on temporary trade barriers (TTBs), we estimate the dynamic employment effects of protectionism through vertical production linkages. First, exploiting high-frequency data and TTB procedural details, we identify trade policy shocks exogenous to economic fundamentals. We then use input-output tables to construct measures of protectionism affecting downstream producers. Finally, we estimate panel local projections using the identified trade policy shocks. Protectionism has small and insignificant beneficial effects in protected industries. The effects in downstream industries are negative, sizable, and significant. The employment decline follows an increase in intermediate input and final goods prices and a decline in stock market returns.

JEL-codes: E24 F13 F14 F16 G14 L14 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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Working Paper: Self-Harming Trade Policy? Protectionism and Production Networks (2020)
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DOI: 10.1257/mac.20190445

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