Steel safeguards and the welfare of U.S. steel firms and downstream consumers of steel: a shareholder wealth perspective

Abstract

Abstract. This paper analyses the steel safeguards applied during 2001–3. Results reveal that for shareholders of U.S. steel companies safeguards generated positive ‘abnormal’ returns of approximately 6%. The cancellation of the safeguards resulted in wealth gains of about 5%. Steel shareholders experienced negative abnormal returns of −5% in response to the WTO ruling that the U.S. had violated WTO law. Our results are consistent with the neoclassical view that producers gain at the expense of consumers. Also, findings indicate that downstream‐consuming firms that diversify production in NAFTA countries avert some trade policy risk associated with higher steel costs caused by safeguard protection.

Industrial Policy and Downstream Export Performance

“…Krupp and Skeath () look at downstream effects from US AD investigations as well, and find that such import protection has significant negative impacts on production in the downstream industries. Liebman and Tomlin () conduct an event study of stock market reactions to US steel safeguard events on both steel producers and major steel consumers, including firms in transportation, metal fabrication and construction. They find there were significant negative effects on downstream‐users of steel from the US steel safeguard actions, though secondary regressions do not find a link between the cost share of steel in these sectors and these downstream effects.…”

Do announcements of WTO dispute resolution cases matter? Evidence from the rare earth elements market

“…Our paper contributes to the growing literature on the economic implications of dispute resolution cases brought to the WTO. The literature thus far has focused mainly on the stock price reactions of affected companies in a classical event study setting (see Liebman, 2006;Liebman and Tomlin, 2007;Desai and Hines Jr., 2008;Liebman and Tomlin, 2008;and Liebman and Tomlin, 2015). However, we choose a different approach, and use the commencement of the WTO dispute resolution case on March 13, 2012 as a natural experiment in order to highlight its effects from four different angles.…”

The Heterogeneous Impact of Brexit: Early Indications from the FTSE

“…Results were comparable to those here and are available on request. 27 Further, when using the industry-level participation measures, we also cluster by industry. so that 0 is for significantly negative AR, 1 is for insignificant AR, and 2 is for significantly positive AR, so that the cutoff between {0, 1} is that between a significantly negative AR and an insignificant AR.…”