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UID:69e2979dea2ae59e4594a183d354df7c
CATEGORIES:Seminars
CREATED:20190405T175346
SUMMARY:David Weinstein - Columbia University
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:\n\nThe Cost of the US-China Trade War: A Stock Market Approach joint with 
 Mary Amiti, and Sang Hoon Kong\nAbstract: \nThe welfare impact of protectio
 n in standard models is composed of a terms-of-trade effect, an efficiency 
 effect, and a profit effect. Existing studies of the US-China trade war hav
 e imposed a zero-profit constraint on the data and have typically found the
  impact of protection to have small effects relative to national income. We
  relax this constraint by allowing for the possibility that the trade war r
 educes the return on investments in firm-specific capital. We show that one
  can use this approach to exactly decompose aggregate stock market returns 
 on days when protection is announced into a macro component and trade compo
 nent. We estimate that the US tariffs and Chinese retaliation reduced the p
 resent discounted value of firm profits by 576 billion dollars or 1.9 perce
 nt of the total US market capitalization. These results suggest that ignori
 ng the impact of trade on firm profits misses an important channel through 
 which trade affects incomes. \n
DTSTAMP:20260404T110400Z
DTSTART:20191107T163000Z
DTEND:20191107T180000Z
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