Peter Schott, Yale University, SOM
Presenter: Peter Schott
Abstract: This paper examines the effect of a change in U.S. trade policy on the investment behavior of manufacturing establishments. Using a difference-in-differences identification strategy, we find that industries more exposed to reductions in import tariff uncertainty exhibit relative declines in investment after the change in trade policy. However, an examination of heterogeneous responses within industries reveals that this effect is concentrated among establishments with low initial levels of capital intensity, skill intensity and labor productivity. Consistent with a reduction in uncertainty, we also find evidence that establishments’ investment activity becomes less lumpy following the policy change.
The International Economics Seminar series is presented jointly with the Walsh School of Foreign Service and the Economics Department of Georgetown University.