The economic effects of trade policy uncertainty

By Dario Caldara, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, Andrea Raffo. Journal of Monetary Economics, 2019

527 citations recorded by the source corpus.

Abstract This paper studies the effects of unexpected changes in trade policy uncertainty (TPU) on the U.S. economy. Three measures of TPU are constructed using newspaper coverage, firms’ earnings calls, and tariff rates. Firm-level and aggregate macroeconomic data reveal that increases in TPU reduce business investment. The empirical results are interpreted through the lens of a two-country general equilibrium model with nominal rigidities and firms’ export participation decisions. News and increased uncertainty about higher future tariffs reduce investment and activity.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/ab7261145906b21da460a32f0501753f457e71f5

Citations in the corpus

• Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector (2019, unknown): “(10)We find that these results are robust to inclusion of controls for trade policy uncertainty from Caldara et al. (2019) in Appendix Section B.”