Using Equity Market Reactions to Infer Exposure to Trade Liberalization

94 Pages Posted: 14 Jul 2020 Last revised: 15 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: July 2020

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.

Suggested Citation

Greenland, Andrew and Ion, Mihai and Lopresti, John and Schott, Peter, Using Equity Market Reactions to Infer Exposure to Trade Liberalization (July 2020). NBER Working Paper No. w27510, Available at SSRN: https://ssrn.com/abstract=3649874

Andrew Greenland (Contact Author)

Elon University - Department of Economics ( email )

Elon, NC 27244
United States

Mihai Ion

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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