Working Paper: CEPR ID: DP17387
Authors: Andrew Greenland; Mihai Ion; John Lopresti; Peter Schott
Abstract: We propose a method for identifying exposure to changes in trade policy based on asset prices that has several advantages over standard measures: it encompasses all avenues of exposure, it is natively firm-level, it yields estimates for both goods and service producers, and it can be used to study reductions in difficult-to-quantify non-tariff-barriers in a way that controls naturally for broader macroeconomic shocks. Applying our method to two well-studied US trade liberalizations provides new insight into service sector responses to trade liberalizations as well as dramatically different responses among small versus large firms, even within narrow industries.
Keywords: China Shock; Event Study; PNTR; Abnormal Returns; CUSFTA
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| positive abnormal returns (AAR) (G17) | firm survival (L21) |
| positive abnormal returns (AAR) (G17) | operating profit growth (O40) |
| positive abnormal returns (AAR) (G17) | sales growth (O49) |
| positive abnormal returns (AAR) (G17) | employment growth (O49) |
| positive abnormal returns (AAR) (G17) | operating profit (service producers) (L84) |
| lower AARs (R49) | adverse firm outcomes (L21) |