Economic and Policy Uncertainty: Export Dynamics and the Value of Agreements

Abstract

This research was conducted while the authors were Special Sworn Status researchers at the Census HQ and Michigan Research Data Centers. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. We thank Clint Carter for assistance and timely disclosure review of all results. Yue Fang and Frank Li (Michigan) and Marisol Rodríguez Chatruc (Maryland) provided excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Brexit Uncertainty and Trade Disintegration

“…The following derivation is adapted from Carballo et al (2018). The export investment decision is ixV specific for each firm so we omit these subscripts without loss of generality.…”

Go Ahead and Trade: The Effect of Uncertainty Removal in the EU’s GSP Scheme

“…The details of the reform as well as a first summary of our findings, are given in subsection 1.1. This paper adds both to the aforementioned literature on trade effects of NRTPs as well as to a fast growing strand of literature on the effects of trade policy uncertainty (TPU) (Handley, 2014;Handley and Limao, 2015;Handley and Limão, 2017;Crowley et al, 2018a,b;Carballo et al, 2018;Graziano et al, 2018). Handley (2014) and Handley and Limao (2015) develop heterogeneous firm models of export entry under TPU and apply them to the context of the reduction in tariff overhangs in Australia (gap between bound and applied tariffs) and the EU accession of Portugal, showing that in both cases the reduction in TPU explained a large fraction of the increase in exporters' entry that followed these events.…”

“…Handley and Limão (2017) extend their 2015 model to allow also for technology upgrading investments by incumbent exporters, and show that the elimination of TPU that followed China's WTO entry explains about 30% of the increase of Chinese exports to the US post-accession. Crowley et al (2018a) examine the negative impact of an increase in TPU generated by tariff-echoing 3 on the likelihood of entry into exporting by Chinese firms, whereas Carballo et al (2018) find that, in the 2008-09 crisis, the increase in TPU determined a stronger reduction of US exports to markets with which the US did not have a preferential trade agreement (PTA), relative to PTA markets. Also the impact of Brexit has been exploited to investigate the effects of a change in TPU: Crowley et al (2018b) show that the switch to a renegotiation regime between the UK and the EU led to a reduction of entry of UK exporters into the EU market; Graziano et al (2018) use instead the uncertainty pre-Brexit referendum finding that greater TPU corresponded to reduced trading activity between the EU and the UK.…”

Where You Export Matters: Measuring Uncertainty in Turkey's Export Markets

“…On the other hand, adverse foreign income shocks in exporting destinations can lead to changes in trade policy and the rise of protectionism in export destinations increasing the level of policy uncertainty. Exporters can experience an increase in levels of economic and trade policy uncertainty in exporting destinations (Carballo et al, 2018). Currently, COVID-19 policy uncertainty shocks in almost every country (Caggiano et al, 2020) can also harm exporters.…”