Trade Policy Uncertainty and Exports: Evidence from China’s WTO Accession

Ling Feng, Zhiyuan Li () and Deborah Swenson ()

No 21985, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies how reduction in trade policy uncertainty affects firm export decisions. Using a firm-product level dataset on Chinese exports to the United States and the European Union in the years surrounding China’s WTO accession, we provide strong evidence that reduction in trade policy uncertainty simultaneously induced firm entries to and firm exits from export activity within fine product-level markets. In addition, we uncover accompanying changes in export product prices and quality that coincided with this reallocation: firms that provided higher quality products at lower prices entered the export market, while firms that had higher prices and provided lower quality products prior to the changes, exited. To explain the simultaneous export entries and exits, as well as the change in product export prices and quality induced by trade policy uncertainty changes, we provide a model of heterogeneous firms which incorporates trade policy uncertainty, tracing the effects of the changes in policy uncertainty on firm-level payoffs and the resulting selection effects which apply to new entrants and incumbents.

JEL-codes: F13 F14 F23 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-bec, nep-cna and nep-int
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Ling Feng & Zhiyuan Li & Deborah L. Swenson, 2017. "Trade policy uncertainty and exports: Evidence from China's WTO accession," Journal of International Economics, vol 106, pages 20-36.

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Related works:
Journal Article: Trade policy uncertainty and exports: Evidence from China's WTO accession (2017)
Working Paper: Trade Policy Uncertainty and Exports: Evidence from China's WTO Accession (2014)
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