Trade and Investment under Policy Uncertainty: Theory and Firm Evidence

• 成果类型: Article
• 署名作者: Handley, Kyle; Limao, Nuno
• 署名单位: University of Michigan System; University of Michigan; University System of Maryland; University of Maryland College Park
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.20140068
• 发表日期: 2015
• 页码: 189-222
• 关键词: exchange-rate; entry; export; AGREEMENTS; COSTS; MODEL; EXIT

摘要

In a dynamic model with sunk export costs, a firm's export investment is lower under trade policy uncertainty, and credible preferential trade agreements (PTAs) increase trade even if current tariffs are low. Exploring Portugal's accession to the European Community as a policy uncertainty shock we find that the trade reform accounted for a large fraction of Portuguese exporting firms' entry and sales; the accession removed uncertainty about future EC trade policies; and this uncertainty channel accounted for a large fraction of the predicted growth. Our approach can be applied to other PTAs and sources of policy uncertainty.