The Economic Effects of Trade Policy Uncertainty

Dario Caldara, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino and Andrea Raffo

No 1256, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We study the effects of unexpected changes in trade policy uncertainty (TPU) on the U.S. economy. We construct three measures of TPU based on newspaper coverage, firms' earnings conference calls, and aggregate data on tari rates. We document that increases in TPU reduce investment and activity using both firm-level and aggregate macroeconomic data. We interpret the empirical results through the lens of a two-country general equilibrium model with nominal rigidities and firms' export participation decisions. In the model as in the data, news and increased uncertainty about higher future tariffs reduce investment and activity.

Keywords: Trade Policy Uncertainty; Textual Analysis; Tariffs; Investment; Uncertainty Shocks (search for similar items in EconPapers)
JEL-codes: C1 D22 D80 E12 E32 F13 H32 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2019-09
New Economics Papers: this item is included in nep-bec, nep-dge, nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Related works:
Journal Article: The economic effects of trade policy uncertainty (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1256

DOI: 10.17016/IFDP.2019.1256

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