The present paper explores the impact of trade policy uncertainty (TPU) on agricultural commodity prices (ACP) by employing bootstrap full- and subsample rolling-window Granger causality tests. We ...find that TPU has both positive and negative effects on ACP, suggesting that TPU may change the supply of and demand for agricultural commodities, leading to fluctuations in ACP. These results support the hypotheses derived from the general equilibrium model, which highlights that TPU can significantly affect ACP. In turn, we find a positive impact of ACP on TPU, indicating that the agricultural commodity market reflects trade conditions in advance. In the context of Sino-U.S. trade frictions and the COVID-19 pandemic, the interaction between TPU and ACP can provide insights for governments to prevent large fluctuations in agricultural commodity markets and stabilize the national economy.
•We explore the role of trade policy uncertainty (TPU) in agricultural commodity prices (ACP).•We employed the bootstrap full- and sub-sample rolling-window Granger causality tests.•Our results shows both positive and negative effects of TPU to ACP.•ACP to TPU shows only positive impact.•Our results are supported by the interaction mechanism stating the mutual influence.
Using a new dataset on the stringency and enforcement of environmental policy, this study is the first to find robust confirmation of a pollution haven effect in a cross-country context by accounting ...for strategically determined environment, trade, and intellectual property right (IPR) policies. A simple game theoretic approach to policy determination is described which suggests an identification strategy based on other country characteristics. It is found that for the top 20th percentile of countries in terms of growth in U.S multinational affiliate value added, as much as 8.6% of that growth between 1999 and 2003 can be attributed to declining relative stringency and enforcement of environmental policy. The results are robust to a number of identification tests, weak IV tests, and third country spatial effects. Further, evidence is found that relatively ‘footloose’ industries are more likely to be affected by environmental policy than more traditionally ‘dirty’ industries and enforcement of environmental policies tends to be a more important deterrent than the stringency of the policy set.
•New measures of trade policy uncertainty are constructed using firm-level and aggregate data.•Trade policy uncertainty reduced U.S. investment by about 1.5% in 2018.•Open-economy DSGE Model with ...heterogeneous firms and nominal rigidities analyzes news and uncertainty about future tariffs.
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.
This paper examines the international spillover effects on the exports from 30 of the United States’ major trading partners of the removal of US trade policy uncertainty, when China joined the WTO in ...2001, by using product-level data at the HS-6 level, from 1991 to 2007. The empirical analysis discovers that removing US trade policy uncertainty has sizable positive spillover effects on Canada, Mexico, Brazil, Belgium, France, Germany, The Netherlands, Norway, Spain, Sweden, Switzerland, the United Kingdom, Hong Kong, India, and New Zealand. The countries that experience negative spillover effects are Austria, Japan, and Taiwan.
•How large are the international spillover effects of the removal of US trade policy uncertainty?•This paper uses product-level data at the HS-6 level, from 1991 to 2007.•Several countries receive positive spillover effects.•Austria, Japan, and Taiwan experience negative spillover effects.•The spillover effects in many countries are persistent.
A growing body of research examines the regional effects of trade liberalization using a weighted average of trade policy changes across industries. This paper develops a specific-factors model of ...regional economies that provides a theoretical foundation for this intuitively appealing empirical approach and also provides guidance on treatment of the nontraded sector. In the context of Brazil's early 1990s trade liberalization, I find that regions facing a 10 percentage point larger liberalization-induced price decline experienced a 4 percentage point larger wage decline. The results also confirm the empirical relevance of appropriately dealing with the nontraded sector. (JEL F13, F16, O19, O24) PUBLICATION ABSTRACT
How WTO commitments tame uncertainty Jakubik, Adam; Piermartini, Roberta
European economic review,
August 2023, 2023-08-00, Letnik:
157
Journal Article
Recenzirano
Odprti dostop
This paper studies how WTO rules and flexibilities shape its members’ trade policy responses to import shocks. Guided by a cost–benefit analysis model and using a unique database of tariff bindings ...for all WTO countries over the 1996–2011 period, we show that WTO commitments do affect members’ trade policy. More stringent bindings reduce the likelihood of responding to import shocks by raising tariffs. In addition, consistent with cooperative behaviour, fear of retaliation also reduces the likelihood of tariff increases. In a counterfactual scenario where WTO members can arbitrarily increase tariffs, they are 4.3 times more likely to do so than under current bindings. The upshot is that WTO commitments contribute to a more stable trade policy environment.
Empirical results on the links between trade openness and economic growth often suggest that, in the long run, more outward‐oriented countries register better economic growth. However, a similar ...level of trade openness can hide different types of trade structures. The aim of this paper was to enrich the way of measuring trade openness taking into account two different dimensions of countries’ integration in world trade: export quality and export variety. Based on the estimation of an endogenous growth model on a panel of 169 countries between 1988 and 2014 using a generalised method of moments estimator, our results confirm that countries exporting higher quality products and new varieties grow more rapidly. More importantly, we find a non‐linear pattern between the export ratio and the quality of the export basket, suggesting that openness to trade may impact growth negatively for countries which are specialised in low‐quality products. A non‐linear relationship between export variety, the export ratio and growth is also found, suggesting that countries increasing their exports will grow more rapidly after reaching a certain degree of the extensive margin of exports.
This paper links the sharp drop in US manufacturing employment after 2000 to a change in US trade policy that eliminated potential tariff increases on Chinese imports. Industries more exposed to the ...change experience greater employment loss, increased imports from China, and higher entry by US importers and foreign-owned Chinese exporters. At the plant level, shifts toward less labor-intensive production and exposure to the policy via input-output linkages also contribute to the decline in employment. Results are robust to other potential explanations of employment loss, and there is no similar reaction in the European Union, where policy did not change.
We characterise the operation of the World Trade Organization's Trade Policy Review as an exercise, albeit valuable, in performative transparency. We describe steps taken by the St. Gallen Endowment ...for Prosperity Through Trade to augment this review process so as contribute towards meaningful transparency. Drawing from recent Trade Policy Reviews of G20 countries, specific examples are described where revealing evidence was provided that facilitates government assessment of their economies' exposure to the commercial policy practices of the reviewed nation. While a step forward, further steps are needed to attain meaningful transparency at the multilateral level that translates into better commercial policies.
COMPARATIVE ADVANTAGE AND OPTIMAL TRADE POLICY Costinot, Arnaud; Donaldson, Dave; Vogel, Jonathan ...
The Quarterly journal of economics,
05/2015, Letnik:
130, Številka:
2
Journal Article
Recenzirano
Odprti dostop
The theory of comparative advantage is at the core of neoclassical trade theory. Yet we know little about its implications for how nations should conduct their trade policy. For example, should ...import sectors with weaker comparative advantage be protected more? Conversely, should export sectors with stronger comparative advantage be subsidized less? In this article we take a first stab at exploring these issues. Our main results imply that in the context of a canonical Ricardian model, optimal import tariffs should be uniform, whereas optimal export subsidies should be weakly decreasing with respect to comparative advantage, reflecting the fact that countries have more room to manipulate prices in their comparative-advantage sectors. Quantitative exercises suggest substantial gains from such policies relative to simpler tax schedules.
PDF
