We study the effects of unexpected changes in trade policy uncertainty (TPU) on the U.S. economy. We construct three measures of TPU based on newspaper coverage, firmsamp;#x27; earnings conference calls, and aggregate data on tari rates. We document that increases in TPU reduce investment and activity using both firm-level and aggregate macroeconomic data. We interpret the empirical results through the lens of a two-country general equilibrium model with nominal rigidities and firmsamp;#x27; export participation decisions. In the model as in the data, news and increased uncertainty about higher future tariffs reduce investment and activity.
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Caldara et al. (2019) studied this question.