Using Equity Market Reactions to Infer Exposure to Trade Liberalization

93 Pages Posted: 19 Aug 2020 Last revised: 9 Jun 2022

See all articles by Andrew Greenland

Andrew Greenland

Elon University - Department of Economics

Mihai Ion

University of Arizona - Department of Finance

John Lopresti

College of William and Mary - Department of Economics

Peter Schott

Yale University

Multiple version iconThere are 3 versions of this paper

Date Written: June 3, 2022

Abstract

We propose a method for identifying exposure to changes in trade policy based on asset prices that has several advantages over standard measures: it encompasses all avenues of exposure, it is natively firm-level, it yields estimates for both goods and service producers, and it can be used to study reductions in difficult-to-quantify non-tariff-barriers in a way that controls naturally for broader macroeconomic shocks. Applying our method to two well-studied US trade liberalizations provides new insight into service sector responses to trade liberalizations as well as dramatically different responses among small versus large firms, even within narrow industries.

Keywords: International Trade, Trade Policy, PNTR, CUSFTA, NAFTA, Event Studies

JEL Classification: F13, F14, G14, G12, E00

Suggested Citation

Greenland, Andrew and Ion, Mihai and Lopresti, John and Schott, Peter, Using Equity Market Reactions to Infer Exposure to Trade Liberalization (June 3, 2022). Available at SSRN: https://ssrn.com/abstract=3640803 or http://dx.doi.org/10.2139/ssrn.3640803

Andrew Greenland

Elon University - Department of Economics ( email )

Elon, NC 27244
United States

Mihai Ion (Contact Author)

University of Arizona - Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
5206210737 (Phone)

John Lopresti

College of William and Mary - Department of Economics ( email )

100 Ukrop Way
Morton Hall
Williamsburg, VA 23185
United States

HOME PAGE: http://wmpeople.wm.edu/site/page/jwlopresti/home

Peter Schott

Yale University ( email )

New Haven, CT 06520
United States

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