Self-Harming Trade Policy? Protectionism and Production Networks (A. Barattieri and M. Cacciatore)

Speaker:  Alessandro Barattieri - University of Montreal
  Wednesday, February 9, 2022 at 12:00 PM In presenza + Zoom Webinar

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 increase in intermediate-input and final goods prices, and a decline in stock market returns.

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Programme Director
Emanuele Bracco

Publication date
December 22, 2021