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Pré-Publication, Document De Travail Année : 2023

Regional Trade Policy Uncertainty

Résumé

Higher uncertainty about trade policy has recessionary effects in U.S. states. First, this paper builds a novel empirical measure of regional trade policy uncertainty, based on the volatility of national import tariffs at the sectoral level and the sectoral composition of imports in U.S. states. We show that a state which is more exposed to an unanticipated increase in tariff volatility suffers from a larger drop in real output and employment, relative to the average U.S. state. We then build a regional open-economy model and we argue that the transmission channels of uncertainty shocks, in particular the precautionary-pricing channel, are magnified in regions that feature the highest import share and a strongest export intensity. Furthermore, we show that an expansionary monetary policy may amplify the regional divergence since it worsens the recession in the most-exposed region to trade policy uncertainty.
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Dates et versions

hal-04239322 , version 1 (12-10-2023)

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  • HAL Id : hal-04239322 , version 1

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Céline Poilly, Fabien Tripier. Regional Trade Policy Uncertainty. 2023. ⟨hal-04239322⟩
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