The COVID-19 pandemic has caused dramatic changes in the way people around the globe live, and has had a profound negative impact on the global economy. Much of this negative impact did not result from the disease itself, but from the lockdown restrictions imposed to contain the spread of the virus. We investigate how national stock market indices reacted to the news of national lockdown restrictions in the period from January to May 2020. We find that lockdown restrictions led to different reactions in our sample of OECD and BRICS countries: there was a general negative effect resulting from the increase in lockdown restrictions, but we find strong evidence for underreaction during the lockdown announcement, followed by some overreaction that is corrected subsequently. This under-/overreaction pattern, however, is observed mostly during the first half of our time series, pointing to learning effects. Relaxation of the lockdown restrictions, on the other hand, had a positive effect on markets only during the second half of our sample, while for the first half of the sample, the effect is negative.

We combine firm-level panel data on U.S. foreign affiliate activity with detailed measures of U.S. trade policy to study the relationship between offshoring and preferential market access. Consistent with theory, we find that trade preferences and offshoring activity are positively and significantly correlated. Using instrumental variables, we estimate that a 10% increase in U.S. foreign affiliate exports to the United States is associated with a 4 percentage point increase in the rate of preferential duty-free access. Restricting attention to the Generalized System of Preferences (GSP) among developing countries, this estimate more than triples, relative to the baseline, full sample results.

Some recent empirical studies, motivated by Grossman and Helpman's (1994) "protection for sale" model, suggest that very few factors (none of them laborrelated) determine trade protection. This paper reexamines the roles that labor issues play in the determination of trade policy. We introduce collective bargaining, differences in labor mobility across industries, and trade union lobbying into the protection-for-sale model and show that the equilibrium protection rate in our model depends upon these labor market variables. In particular, our model predicts that trade protection is structurally higher than in the original protectionfor-sale model if the trade union of a sector lobbies but capital owners do not, because union workers collect part of the protection rents; equilibrium protection is lower if capital owners lobby but the trade union does not, because part of the protection rents is dissipated to workers. Using data from U.S. manufacturing, we find that collective bargaining, differences in labor mobility across industries, and trade union lobbying indeed play important roles in the determination of U.S. trade policy. Journal of Economic Literature Classification: F13, F16

A standard finding in the political economy of trade policy literature is that we should expect export-oriented industries to attract more assistance than importcompeting industries. In reality, however, trade policy is heavily biased toward supporting import industries. This paper shows within a standard protection for sale framework, how the costliness of raising revenue via taxation makes trade subsidies less desirable and trade taxes more desirable. The model is then estimated and its predictions tested using U.S. tariff data. An empirical estimate of the costliness of revenue-raising is also obtained. Journal of Economic Literature Classification: F13, F16

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