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Taking Stock of Trade Policy Uncertainty: Evidence from China’s Pre-WTO Accession

George Alessandria, Shafaat Khan, Armen Khederlarian, Dec 04, 2019

We propose a method to estimate the perceived likelihood of an uncertain increase in tariffs using the rise in trade flows in advance of the uncertainty resolution. We apply this framework to the uncertainty surrounding the U.S.’s annual renewal of China’s most-favored-nation (MFN) status in the 1990s. By matching the observed rise in imports in advance of U.S. Congress votes on the renewal, we find that the probability...

The Impact of the China Tire Safeguard

Sunghoon Chung, Joonhyung Lee, Oct 23, 2019

This column evaluates the impact of the China tire safeguard on the US tire industry. Contrary to claims made by the US government, we find that total employment and average wages in the tire industry were unaffected by the safeguard. This result is not surprising as we find that Chinese tires have been completely diverted to other exporting countries due to the strong presence of multinational corporations in the world tire market. On the other hand, US domestic tire prices increased by up to 10% during the safeguard period...

Brain Drain: The Impact of Air Pollution on Firm Performance

Shuyu Xue, Bohui Zhang, Xiaofeng Zhao, Feb 12, 2020

By exploiting the exogenous variation in air pollution caused by China’s central heating policy, we find that air pollution reduces the accumulation of executive talent and high-quality employees. We also find that firms located in polluted areas have poorer performance, especially for firms with greater dependence on human capital.

Exporting out of Agriculture: The Effects of the China Shock in China

Jessica Leight, Jan 01, 2020

This paper analyzes the effect of China's 2001 accession to the World Trade Organization on structural transformation at the local level, exploiting cross-sectional variation in tariff uncertainty faced by county economies pre-2001. Using a new panel of 1,800 Chinese counties from 1996 to 2013, we find that counties more exposed to the reduction in tariff uncertainty post-accession are characterized by increasing exports...

Magnification of the “China Shock” Through the U.S. Housing Market

Yuan Xu, Hong Ma, Robert C. Feenstra, Jan 22, 2020

The “China shock” operated in part through the U.S. housing market, which is one important reason the China shock was as big as it was. If housing prices had not responded at all to the China shock, then the total employment effect would have been reduced by more than one-half. Even when fully recognizing that housing prices responded to the China shock, the independent employment effect of the China shock is still reduced by around 30%.