NBER

Jeronimo Carballo

Department of Economics, UCB 256
University of Colorado at Boulder
Boulder, CO 80309

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: University of Colorado at Boulder

NBER Working Papers and Publications

March 2018Economic and Policy Uncertainty: Export Dynamics and the Value of Agreements
with Kyle Handley, Nuno Limão: w24368
We examine the interaction of economic and policy uncertainty in a dynamic, heterogeneous firms model. Uncertainty about foreign income, trade protection and their interaction dampens export investment. This can be mitigated by trade agreements, which are particularly valuable in periods of increased demand volatility. We use firm data to establish new facts about U.S. export dynamics in 2003-2011 and estimate the model. We find a significant role for uncertainty in explaining the trade collapse in the 2008 crisis and partial recovery in its aftermath. Consistent with the model predictions, we find that the negative effects worked (1) through the extensive margin, (2) in destinations without preferential agreements with the U.S. (accounting for over half its trade) and (3) in industries wi...

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