American Economic Journal: Macroeconomics
no. 2, April 2023
Using monthly data on temporary trade barriers (TTBs), we estimate the dynamic employment effects of protectionism through vertical production linkages. First, exploiting high-frequency data and TTB procedural details, we identify trade policy shocks exogenous to economic fundamentals. We then use input-output tables to construct measures of protectionism affecting downstream producers. Finally, we estimate panel local projections using the identified trade policy shocks. Protectionism has small and insignificant beneficial effects in protected industries. The effects in downstream industries are negative, sizable, and significant. The employment decline follows an increase in intermediate input and final goods prices and a decline in stock market returns.
Barattieri, Alessandro, and Matteo Cacciatore.
"Self-Harming Trade Policy? Protectionism and Production Networks."
American Economic Journal: Macroeconomics,
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Trade Policy; International Trade Organizations
Empirical Studies of Trade
Trade and Labor Market Interactions
Information and Market Efficiency; Event Studies; Insider Trading
Transactional Relationships; Contracts and Reputation; Networks