Fed researchers model impact of recent trade uncertainty
Trade uncertainty could account for a 1–2% decline in US investment, researchers say
Trade policy uncertainty has reduced US investment and economic activity, a paper published by the Federal Reserve finds.
In the paper, Dario Caldara and co-authors examine the effects of an unexpected increase in trade uncertainty on the US economy. They use newspaper coverage, firms’ earnings conference calls and aggregate data on tariff rates as measures for uncertainty.
They find all three of the measures show that in 2018 trade policy uncertainty shot up to levels not seen since the 1970s
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