Working Paper: NBER ID: w29672
Authors: Kyle Handley; Nuno Limo
Abstract: Trade policy uncertainty (TPU) has become an important source of economic uncertainty and research. We review the main sources and measures of TPU. We then provide a conceptual framework for modeling TPU and methods of estimating and quantifying its effects. We analyze its role in trade agreements and discuss open questions for future research.
Keywords: Trade Policy; Uncertainty; Trade Agreements
JEL Codes: D81; F1; F13; F21; F4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade policy uncertainty (TPU) (F13) | higher option value of waiting (J17) |
| higher option value of waiting (J17) | reduces current investments in trade (F19) |
| trade agreements (TAs) (F13) | reduce trade policy uncertainty (TPU) (F13) |
| reduce trade policy uncertainty (TPU) (F13) | increase export values (F10) |
| reduce trade policy uncertainty (TPU) (F13) | facilitate market entry (F23) |
| trade policy uncertainty (TPU) (F13) | dampen firm imports of intermediates (F18) |
| credible trade agreements (TAs) (F13) | mitigate TPU effects (O33) |
| trade policy uncertainty (TPU) (F13) | significant direct trade impacts (F69) |
| significant direct trade impacts (F69) | affect broader economic outcomes (F69) |