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“The Economic Effects of Trade Policy Uncertainty”

Summary:
That’s the title of a new paper by Dario Caldara, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo: 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 tariff 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. And here’s one set of

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That’s the title of a new paper by Dario CaldaraMatteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo:

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 tariff 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.
And here’s one set of IRF’s:
“The Economic Effects of Trade Policy Uncertainty”
Something to keep in mind when considering the evolution of their news-based trade policy uncertainty index:
“The Economic Effects of Trade Policy Uncertainty”
Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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