Using Equity Market Reactions to Infer Exposure to Trade Liberalization

Andrew N. Greenland; Mihai Ion; John W. Lopresti; Peter K. Schott

doi:10.3386/w27510

Using Equity Market Reactions to Infer Exposure to Trade Liberalization

Andrew N. Greenland, Mihai Ion, John W. Lopresti & Peter K. Schott

Working Paper 27510

DOI 10.3386/w27510

Issue Date July 2020

Revision Date February 2021

We develop a new method for identifying ﬁrm exposure to changes in policy using asset prices that has several advantages over standard measures: it is natively ﬁrm level, it encompasses the net impact of all avenues of exposure, it yields estimates for ﬁrms in all sectors of the economy, and it captures aspects of policy change that can be diﬃcult to quantify using standard approaches. We provide guidelines on how our method can be used in a wide range of settings and, applying it to two well-studied US trade liberalizations, ﬁnd that it oﬀers new insight into those policies’ distributional implications.

We thank Kerem Cosar, Eugene Fama, Teresa Fort, Stefania Garetto, David Hummels, Ralph Ossa, Justin Pierce, Steve Pischke, Katheryn Russ, Kanis Saengchote, Matthew Schaﬀer, Mine Senses, Brandon Sheridan, Claudia Steinwender, Dan Treﬂer, Harald Uhlig, Tom Zylkin, and seminar participants at ASSA, CUHK, Elon University, the Fed Board, FREIT, the Harvard/MIT macroeconomics seminar, Hitotsubashi, LSE, the Mid-Atlantic Trade Workshop, the NBER ITI, Princeton University, Purdue University, UNC Chapel Hill, the University of Chicago, the University of Toronto and the University of Tokyo for helpful comments and feedback. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
MARC RIS BibTeΧ
- July 7, 2020

Using Equity Market Reactions to Infer Exposure to Trade Liberalization

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